Fast Track IVAs

April 2004 

20.44EA Introduction

The EA2002 Schedule 22 inserts sections 263A-G into the IA86 and The Insolvency (Amendment) Rules 2003 Chapter 7 amends the Insolvency Rules 1986 and introduces a new streamlined 'fast track' IVA procedure (FTVA) to assist in the arrangement of post bankruptcy IVAs where the debtor is an undischarged bankrupt.

The official receiver is authorised to act as the nominee and supervisor of an FTVA provided that the debtor is an undischarged bankrupt at the time the proposal is made.

All references in the IA86 or any other Act to a voluntary arrangement are to be treated as including FTVAs where the official receiver is supervisor.

The FTVA provisions only apply where,  

  • the debtor is an undischarged bankrupt,
  • the official receiver is specified in the proposal as the nominee, and
  • no interim order under s 253 is applied for.

Notes: [s263A to G][s253][s389B] [s263D(7)]

 

20.45EA Definition of creditor

A person is a creditor for the purposes of a FTVA only if he/she is a creditor of the debtor in respect of a debt which is provable in bankruptcy and the official receiver is aware of his/her claim and address details. The amount of his/her debt is that which is outstanding at the date of the bankruptcy order. Bankrupts who have other non provable creditors e.g. matrimonial debts may wish to proceed with an IVA where an authorised insolvency practitioner acts as the nominee or supervisor (see Part 5) in order that they can be included in the IVA.

Note: [263B(3)]

 

20.46EA Which cases are suitable

The official receiver should agree to act as nominee in cases where assets are readily and easily available e.g.  

  • cash at bank,
  • contributions from income or
  • the introduction of third party funds.

Other assets capable of inclusion in an FTVA include the bankrupt's interest in a property where the bankrupt is able to introduce a 'cast iron' purchaser who is content to use The Insolvency Service's low-cost conveyancing scheme (see Chapter 31.3, Part 5). The official receiver should not agree to act as nominee in cases involving complex asset realisation e.g. where there has been trading or where the assets are 'risky' or time consuming to realise. Should the bankrupt wish to proceed with an application for an IVA he/she should be advised to seek the advice of an insolvency practitioner (see Part 5).

In a case where the only asset is payment to be made from income, there must be a better return to creditors than could be achieved from an income payments order or income payments agreement (IPO/IPA) e.g. the bankrupt agrees to pay a bigger proportion of income than would be claimed by the official receiver in an IPO/IPA or the bankrupt agrees to pay for a longer period e.g. more than 3 years (see paragraph 20.56).

 

20.47EA Further enquiry cases

Where there are clear grounds for a bankruptcy restrictions order (BRO), or for the submission of a criminal allegation statement of fact to Authorisations Team, the official receiver should decline to act as nominee. There is essentially a conflict of interest between the duty to protect the public and a duty to obtain the best return for creditors. The duty to protect the public must take precedence. Where the official receiver declines to act it remains open to the bankrupt to approach an insolvency practitioner to act as nominee (see Part 5). Where the official receiver declines to act as nominee he/she should consider sending a comprehensive report to creditors, at the earliest opportunity, who will be able to vote in any subsequent IVA from an informed position.

In most cases at the point at which the FTVA decision needs to be taken there will not be enough evidence to say categorically that the case is likely to result in the submission of a criminal allegation statement of fact or an application for a BRO. It would be wrong to delay taking an FTVA decision (or decline to act) on the grounds that a criminal allegations statement of fact may be submitted to Authorisations Team or that there might be an application for a BRO. The official receiver should consent to act, in suitable cases, unless there is strong evidence to support a BRO/criminal allegations statement of fact. The official receiver may need to make a robust decision and should take each case on its merits.

In a clear cut BRO case, if the official receiver moves quickly, it may be possible to obtain a BRO where the bankrupt has approached an insolvency practitioner to act as supervisor in an IVA. In such a case an interim BRO may be appropriate. Applications for BROs are dealt with in Chapter 25 - Restrictions on Bankrupts. If the bankruptcy order is annulled following an IVA (see paragraphs 20.66 to 20.67) any BRO which has been made still stands, however no application for a BRO can be made following the annulment. The official receiver should be aware that it is only conduct post 1 April 2004 that may be taken into consideration in respect of an application for a BRO.

Note: [r6.73]

 

20.48EA Completion of FTVA proposal forms

(Amended February 2014)

In suitable cases the possibility of proposing an FTVA should be drawn to the bankrupt's attention at the initial vetting interview. If the bankrupt wishes to consider an FTVA the standard FTVA forms CHM Fast Track voluntary Arrangements Forms to Use should be provided for completion. The official receiver should use his/her discretion on a case by case basis as to how much help should be given to the bankrupt in preparing the proposal.

The completed FTVA forms must be returned by the bankrupt within 14 days of receipt. If they are not returned within this time the official receiver should activate the IPO/IPA process and continue with the administration of the bankruptcy in the usual way (see paragraph 20.49). The bankrupt should be notified to this effect.

 

20.49EA Continuation of bankruptcy while application is in progress

If the bankrupt indicates an intention to apply for a FTVA the income payments order/agreement (IPO/IPA) forms should still be completed as usual at the first interview with the official receiver. The processing of any IPO/IPA should be delayed whilst the FTVA is under consideration. Completion of these forms will enable the official receiver to action the IPO/IPA if the FTVA subsequently fails.

The continuation of other bankruptcy actions such as the notice of a meeting of creditors or a notice of no meeting and the sending of the report to creditors (see Chapter 16 - Meetings and Chapter 18 - Reports to Creditors) are not stayed by any proposed IVA application. In certain circumstances e.g. where information is available to suggest misconduct it may be appropriate to send out the report to creditors notwithstanding the fact that the bankrupt is putting a proposal for a FTVA together (see paragraph 20.48). In other cases where the official receiver believes the bankrupt's proposal for an FTVA is likely to be agreed by creditors it may be appropriate to delay sending the report to creditors and meetings notices even if the target dates are missed. The official receiver should use his/her discretion on a case by case basis taking into account the likelihood of the proposal being accepted by the creditors and any other circumstances of which he/she is aware.

Notes: [r6.73][s293]

 

20.50EA Contents of the proposal

The bankrupt's proposal for an FTVA must be accompanied by the nominee fee (see paragraph 20.53). The bankrupt's proposal, for which a standard form is available,  must contain –  

  • a short explanation why, in his/her opinion, a FTVA is desirable, and give reasons why his/her creditors may be expected to concur with the FTVA,
  • a statement that the bankrupt is aware that he/she commits an offence under s262A if for the purpose of obtaining the approval of the creditors to his/her proposal he/she makes any false representation, or fraudulently does, or omits to do anything.

The proposal should also state, or otherwise deal with –  

  • the bankrupt's assets, with an estimate of their value; the extent (if any) to which they are charged in favour of creditors (so far as within the bankrupt's immediate knowledge) and whether any or part of those assets is to be excluded from the FTVA.
  • details of any property, excluding the assets of the bankrupt, which is to be included in the FTVA, the source of such property and the terms of its inclusion (i.e. third party property).
  • the nature and amount of the bankrupt's liabilities (as far as within his/her immediate knowledge) and the manner in which they will be dealt with in the FTVA with particular reference to preferential creditors, secured creditors, associates of the bankrupt and any claims relating to antecedent transactions.
  • whether any guarantees have been given of the bankrupt's debt and if so by whom and whether the guarantor is an associate of the bankrupt.
  • the proposed duration of the FTVA.
  • the proposed dates of distributions to creditors with estimates of the amounts to be distributed.
  • how it is proposed to deal with the claims of the creditors bound by the FTVA by virtue of section 263D(2)(c).
  • an estimate of the fees and expenses that will be incurred in connection with the approval and implementation of the FTVA (see paragraph 20.68).
  • whether, for the purposes of the FTVA, any guarantees are to be offered by third parties and whether any security is to be given or sought in respect of those guarantees.
  • the manner in which funds held for the purpose of payment to creditors, and not so paid on termination of the FTVA are to be dealt with.
  • the functions which are to be undertaken by the supervisor of the FTVA.
  • the address of the official receiver to which correspondence should be sent.
  • the names and addresses of all the bankrupt's known creditors, so far as within the bankrupt's immediate knowledge
  • whether the EC Regulation will apply and if so whether the proceedings will be main proceedings or territorial proceedings (see Chapter 41)

Where the bankrupt has submitted forms for an FTVA to the official receiver no application for an interim order under s253 may be made until the official receiver makes his/her decision on the FTVA (see paragraph 20.55).

Note: [s263A] [r5.37] [FTVA proposal form][s262A] [s263D(2)(c)] [EC Regulation on Insolvency Proceedings 2002 Article 37][s263B(5), s253]

 

20.51EA Accounting for FTVAs

From 1 April 2004 FTVAs will be accounted for by a system known as Kypera. Kypera will enable the FTVA to be tracked at all stages from the original FTVA proposal through to the final distribution. All data input into Kypera will be done by the RTLUs and/or Finance Section. The input dealt with by RTLUs will require the back capture of data and it is therefore essential that the FTVA action sheets are completed by the official receiver and accurately record all the events and dates. A separate FTVA action sheet should be completed by RTLU.

Note: [IVA action sheet (OR) and IVA action sheet (RTLU)]

 

20.52EA Registration fee (Amended December 2009)

Where an FTVA proposal is sent to the official receiver a deposit of £15 as security for fee IVA1 should accompany it. This fee is for the registration of the FTVA on the individual insolvency register should creditors accept the bankrupt's proposal (see paragraph 20.78).

For legal reasons the registration fee is considered to be a deposit until the FTVA proposal has been accepted by the creditors and the FTVA registered by the Secretary of State. For details on treatment of the registration fee should the official receiver decline to act as nominee or the creditors reject the proposal see paragraphs 20.58 and 20.63.

Note: [The Insolvency Proceedings (Fees) (Amendment) Order 2009 Article 6 (2)]

 

20.53EA Nominee's fee

The FTVA proposal must also be accompanied by a deposit of £300 as security for fee IVA2, the nominee fee. The nominee fee is charged by the official receiver for acting as nominee.

For legal reasons the nominee fee is considered to be a deposit until a decision has been taken by the official receiver on whether to act as nominee. For details on treatment of the nominee fee should the official receiver decline to act as nominee see paragraph 20.58.

Notes: [r5.37] [The Insolvency Proceedings (Fees) Order 2004 Schedule 2 Fee IVA2]

 

20.54EA  Banking of FTVA deposit

(Amended November 2012)

The official receiver may receive the FTVA deposit of £315 (the deposit for the registration fee and nominee fee) either as cash, cheque or a direct payment into an account with Citibank which has been specifically opened to deal with the receipt of FTVA monies. The Citibank account number is 2307626 Sort Code 08-33-00, account name ‘GBS RE INSS FTVA’. All official receiver's offices will be provided with a paying in book for this account. The deposit must not be paid into the estate account. Any funds relating to FTVAs are not paid into the Insolvency Services Account (ISA).

If the official receiver receives the FTVA deposit in cash this must be paid into the Citibank account within 24 hours. The official receiver must issue a receipt for this money, a copy of which must be sent to Finance Section.

If the FTVA deposit is received by cheque, the cheque must be made payable to The Insolvency Service and sent to Finance Section who will pay the cheque into the Citibank account.  Where the FTVA deposit is paid by direct transfer this should be paid direct into the Citibank account. The official receiver should not take any further action in respect of the FTVA proposal until Finance Section have notified the official receiver that the cheque has cleared. This will normally be 5 days after receipt of the cheque by Finance Section.

 

20.55EA Requirements for the official receiver's decision

When the proposal is received the official receiver must decide whether the proposal has a reasonable prospect of being approved and implemented and whether he/she agrees to act as nominee in relation to the proposal. Within 28 days of receipt of the proposal the official receiver must serve a notice on the bankrupt stating that –  

  1. he/she agrees to act as nominee in relation to the proposal;
  2. he/she declines to act as nominee in relation to the proposal and specifying the reasons for his/her decision; or
  3. on the basis of the information supplied to him/her it is not possible to make a decision as to whether to act and specifying what further information is required.

Where the bankrupt is requested to supply further information the official receiver must notify the bankrupt of his/her decision within 28 days of the receipt of the information.

Finance Section should be informed of the official receiver's decision in order that they can properly account for the deposits for fees IVA1 and IVA2.

Note: [r5.38, form FTVALET2]

 

20.56EA Factors to consider when deciding to act as nominee

In deciding to act as nominee in a FTVA the official receiver needs to consider the cost of administering the FTVA as supervisor. The principle behind an FTVA is that the creditors will receive more than they would in a bankruptcy as a consequence of additional monies which would be available in the FTVA e.g. third party funds or an extended period of contributions from income. Official receivers need to take into consideration the level of liabilities, the number of creditors and the likely amount to be realised by the official receiver as supervisor. There may be cases where a large number of creditors make the cost of distribution in a FTVA prohibitive.

To assist the official receiver in deciding whether to act as nominee in respect of an FTVA where the bankruptcy order is made on or after 1 April 2004, a table is attached at Annex 1 to calculate an initial assessment between the return to creditors in a FTVA and the return to creditors in a bankruptcy, taking into consideration all the fees and costs involved. This example is available as a spreadsheet on the Change and Technology page of the intranet to assist in the calculation. Worked examples of this calculation with additional commentary are provided at Annex 2 and Annex 3.

As a general guideline any proposal with less than £5000 worth of assets is unlikely to be worthwhile, unless it is a debtor's petition.

It is possible, where a bankruptcy order is made prior to 1 April 2004 for a bankrupt to request the official receiver to act as nominee and supervisor for the purposes of an FTVA.

Where a bankruptcy order is made prior to 1 April 2004 The Insolvency Fees Order 1986 and the Insolvency Regulations 1994 (Regulations 33 - 36) are applicable for transactions on the estate account up to 1 April 2004 (reference should be made Chapter 36 version pre 1 April 2004). In respect of transactions on the estate account post 1 April 2004, The Insolvency Proceedings (Fees) Order 2004 applies. The Insolvency Proceedings (Fees) Order 2004 revoked the whole of The Insolvency Fees Order 1986 with regard to fees chargeable in bankruptcy except for the Secretary of State fee in respect of bankruptcy orders made pre 1 April 2004. Consequently where a bankruptcy order is made pre 1 April 2004 this fee is charged on all realisations whether the realisation is made pre or post 1 April 2004.

To assist the official receiver in deciding whether to act as nominee in respect of an FTVA where the bankruptcy order is made prior to 1 April 2004 , a table is attached at Annex 4 to calculate an initial assessment of the return to creditors in an FTVA and the return to creditors in bankruptcy. As a general guideline any proposal with less than £5000 of assets is unlikely to be worthwhile.

Notes: [s263B ] - bankruptcy order made on or after 1 April 2004 [The Insolvency Proceedings (Fees) Order 2004] - bankruptcy order made pre 1 April 2004 [The Insolvency Fees Order 1986 (Schedule Part 2 fee 13), The Insolvency Regulations 1994]

 

20.57EA Petition deposit (May 2007)

In any case where the bankruptcy order is subsequently annulled following the approval by the creditors of an FTVA the petition deposit may be returned to the person who made it.

Where a bankrupt has presented his/her own petition the deposit may have been paid by the bankrupt. In such circumstances on the making of the annulment following the approved FTVA the petition deposit will be used to offset any outstanding fees and the balance included in the FTVA.

Note: [The Insolvency Proceedings (Fees) Order 2004 Article 6(5)]

 

20.58EA Where the official receiver declines to act

Where the official receiver declines to act as nominee he/she is required under rule 5.38(1)(b) to inform the bankrupt of the reason for his/her decision (see paragraph 20.55) e.g. the official receiver is of the opinion that the proposal does not have a reasonable prospect of being approved by the creditors. Where the official receiver is of the opinion that it may not be in the public interest to proceed with an FTVA (see paragraph 20.47) the official receiver should state that he/she declines to act as nominee because there are aspects of the bankruptcy that require further investigation. If the bankrupt seeks further information the official receiver should outline the actions/transactions that require further explanation.

It remains open to the bankrupt to approach an insolvency practitioner to act as nominee (see Part 5) and the official receiver will continue with the administration of the bankruptcy in the usual way.

The official receiver will need to notify Finance Section as to whom the deposit for the nominee fee and registration fee will be refunded. This information should have been recorded on the FTVA action sheet (see paragraph 20.51). Where the fees have been paid by the bankrupt this will be retained and credited to the bankrupt's estate account. Where the deposit has been paid by a third party it will be returned to that third party.

Note: [form FTVALET2]

 

20.59EA Where the official receiver agrees to act as nominee (amended August 2010)

As soon as reasonably practicable after agreeing to act as nominee and having confirmed that the nominee fee has cleared, where it was not paid in cash, the official receiver must send to all creditors (see paragraph 20.45) and any trustee who is not the official receiver, a copy of the proposal and a notice inviting the creditors to approve or reject the proposal including the voting form, Form 5.6. All the creditors who wish to vote must give notice on Form 5.6 of the decision on whether to accept or reject the bankrupt's proposal. Modifications to the proposal cannot be made.

The notice will include a date, not less than 14 days and not more than 28 days from the date of the notice, which will be the final date on which the official receiver will accept votes from creditors.

Notes: [FTVANOT1, Form 5.6] [r5.39]

 

20.60EA Entitlement to vote (amended August 2010)

Any creditor who is sent notice by the official receiver is entitled to vote in the amount of his/her debt at the date of the bankruptcy order. All creditors who wish to vote shall give notice in Form 5.6 to the official receiver of their decision whether to accept or reject the debtor's proposal. Such notification must be sent to the official receiver at the address specified on the notice.

The voting form may be signed by a representative of the creditor but must be accompanied by written authority for that representation authenticated by the creditor.

A creditor’s entitlement to vote is calculated by reference to the amount of the creditor's debt at the date of the bankruptcy order. A creditor may vote in respect of a debt for an unliquidated amount or any debt whose value is not ascertained, and for voting purposes (but not otherwise) the debt shall be valued at £1 unless the official receiver agrees to a higher figure.

The official receiver has the power to admit or reject a creditor's claim in full or in part. The official receiver's decision to admit or reject a claim is subject to appeal to the court by any creditor or the debtor. Any appeal must be made within 28 days of the reporting of the result of the FTVA proposal to the Secretary of State under section 263C (or in cases where the official receiver agreed to act before 6 April 2010, to the court) (see paragraph 20.62). If on appeal the official receiver's decision is reversed or varied, or votes are declared invalid, the court may order another vote to be held, or make such other order as it thinks just.

Note: [r5.40 and r5.41 Form 5.6][r5.42, s263C] [r12A.9]

 

20.61EA Requisite majorities

A proposal for an FTVA is approved by the creditors if three quarters or more in value of the creditors who vote approve the proposal.

A creditor may not vote in respect of any claim or part of a claim –  

  1. where the claim or part thereof is secured,
  2. where the claim is in respect of a debt wholly or partly on, or secured by, a current bill of exchange or promissory note unless the creditor is willing -   
    1. to treat the liability to him/her on the bill or note of every person who is liable on it antecedently to the debtor, and against whom a bankruptcy order has not been made (or in the case of a company, which has gone into liquidation) as a security in his/her hands; and
    2. to estimate the value of the security and (for the purposes of entitlement to vote, but not of any distribution under the arrangement) to deduct it from his/her claim.

A proposal is not approved if those voting against it include more than half in value of the creditors, counting in the latter only those –  

  1. who gave notice to the official receiver in accordance with rule 5.40 (see paragraph 20.60);
  2. whose votes are not left out as a consequence of a) and b)(i) and (ii) above; and
  3. who are not, to the best of the official receivers' belief, associates of the debtor.

It is for the official receiver to decide whether, under rule 5.43(3)(c) a person is an associate of the debtor and in relation to this the official receiver is entitled to rely on the information provided by the debtor's statement of affairs or otherwise in accordance with Part 5 of the Rules.

Note: [r5.43]

 

20.62EA Report of result (amended August 2010)

For cases where the official receiver agreed to act as nominee in respect of an FTVA before 6 April 2010, he/she must as soon as reasonably practicable after the result of the FTVA proposal is known, report to the court under section 263C whether the FTVA has been approved or rejected. The report to court must state whether, in the official receiver’s opinion, the EC Regulation applies to the FTVA and if so whether the proceedings are main proceedings or territorial proceedings.

For cases where the official receiver agreed to act as nominee on or after 6 April 2010, he/she must notify the Secretary of State of the result of the FTVA under section 263C. The requirement to report the result of the FTVA to the court and provide a statement regarding the EC Regulation, has been removed.

In all cases where an FTVA is approved, the official receiver must also give written notice under rule 5.45 to the Secretary of State of his appointment as supervisor and to all creditors of whose address he/she is aware. (see paragraph 20.78).The official receiver must also report to Finance Section whether the FTVA has been approved or rejected.

Note: [s263C, r5.44 (revoked by IAR 2010), r5.45 form FTVAREP, FTVANOT2]

 

20.63EA Rejection of FTVA by creditors - treatment of deposit

If the creditors reject the FTVA, the nominee fee is retained as the official receiver has carried out the necessary work to justify charging this fee.

The deposit for the registration fee will be rebated as the FTVA will not require registration. Where the deposit was paid by the bankrupt this will be retained and credited to the bankrupt's estate account. Where the deposit was paid by a third party it must be returned to that third party.

Finance Section must be informed of the creditors' decision to allow them to properly account for the deposit for IVA1.

Note: [The Insolvency Proceedings (Fees) Order 2004 Article 7(4)] 

 

20.64EA Approval of FTVA (amended August 2010)

On the approval of the FTVA the official receiver becomes the supervisor and must give written notice of his/her appointment to the Secretary of State, all creditors of whose address he/she is aware and any insolvency practitioner trustee.

At this stage the official receiver should change the case status on LOIS and transfer the case to RTLU. RTLU will deal with the notification to the Secretary of State (and the court where required) the bankrupt and creditors (see paragraph 20.62).  RTLU will also deal with all the realisations of assets within the FTVA, the application for annulment of the bankruptcy order and the supervisor’s reports and accounts (see paragraphs 20.66 to 20.71).

When the official receiver reports under section 263C that an FTVA has been approved (see paragraph 20.62) the FTVA 

  • takes effect,
  • binds the debtor, and
  • binds every person who was entitled to take part in the arrangement under section 263B(2).

Note: [s263D, r5.45, form FTVANOT2]

 

20.65EA Revocation of FTVA

The debtor, a creditor, the trustee of the bankrupt's estate, or the official receiver may make an application to the court for the revocation of the FTVA on the grounds that it unfairly prejudices the interests of a creditor of the debtor, or that a material irregularity occurred in relation to the FTVA.

Any application for revocation may not be made after the end of the period of 28 days beginning with the date on which the official receiver makes his report  under section 263C (see paragraph 20.62) subject to the court's general discretion to disregard time limits. A creditor not aware of the official receiver's arrangements for the approval of the FTVA at the time they are made may issue an application within 28 days beginning with the date on which he/she became aware of the FTVA.

Where the court makes an order of revocation of the FTVA and where the person who applied for the order is –  

  • the debtor, he/she must serve a sealed copy of the order on the supervisor and any trustee who is not the official receiver;
  • the supervisor, he/she must serve a sealed copy of the order on the debtor and any trustee who is not the official receiver;
  • a trustee who is not the official receiver, he/she must serve a sealed copy of the order on the debtor and the supervisor;
  • a creditor, he/she must serve a sealed copy of the order on the debtor, supervisor and any trustee who is not the official receiver;

As soon as practicable after receiving a copy of the order of the revocation the official receiver, as supervisor, must give notice of it to all persons who were sent a copy of the bankrupt's proposal under rule 5.39 (see paragraph 20.59) and all other persons who are affected by the order.

Where the official receiver, as supervisor, has applied to the court for the order of revocation he/she must also give written notice to Insolvency Practitioners Unit that all information regarding the FTVA held on the Individual Insolvency Register should be deleted as provided for in the Rules (see paragraph 20.78).

Note: [s263F][s263C] [r5.46] [r5.46(3)] [r5.46(4), r6A.3]

 

20.66EA Annulment

Following the approval of the FTVA the court will annul the bankruptcy order on the application of the official receiver. The application cannot be made during the 28 day period in which an application may be made for the revocation of the FTVA (see paragraph 20.65). The annulment application should be made within 21 days of the expiry of the 28 day period and must state: 

  • the section under which the application is made
  • that the official receiver is not aware of any application or appeal under section 263F (see paragraph 20.65) that remains to be disposed of.

The application for annulment should also be accompanied by a copy of the proposal and a report of the result under section 263C (see paragraph 20.62). The courts have agreed that the application for annulment may be dealt with on a paper basis with no requirement on the official receiver to attend the court hearing.

The court will send sealed copies of the order of annulment to the official receiver and the bankrupt.

The official receiver must inform Finance Section of the date of any annulment order made and enter the date of the annulment on LOIS.

Note: [form ANNULFTVA][s263D(3);r5.58]

 

20.67EA Notice of annulment to be sent to creditors (amended August 2010)

Where the official receiver has notified creditors of the debtor's bankruptcy and the bankruptcy order is annulled he/she must notify them of the annulment. Expenses incurred by the official receiver in giving notice are a charge in the official receiver's favour on the property of the former bankrupt, whether or not it is held by the official receiver.

Where any property is in the hands of a trustee or any person other than the former bankrupt, the official receiver's charge is valid subject only to any costs that may be incurred by the trustee or that other person in effecting realisation of the property for the purpose of satisfying the charge.

The former bankrupt is entitled to request within 28 days of the making of the annulment order, that the Secretary of State give notice of the making of the order of annulment in the gazette and in the same manner as the bankruptcy order was originally advertised (if it was, in fact, originally advertised). The official receiver is responsible for dealing with these requests and the costs of such publication are met from the administration fee.  

Note: [r5.60][r5.59]

 

20.68EA Refund of administration fee (Amended December 2009)

Where proposals made by a bankrupt for an FTVA with the official receiver acting as supervisor are approved by the bankrupt's creditors fee B1 shall be reduced to £857.50 and any payments made in respect of fee B1 which exceed that amount shall be refunded to the estate of the bankrupt. (see Chapter 36 Estate Accounting). The bankruptcy administration fee (fee B1) is currently £1715.

[The Insolvency Proceedings (Fees) (Amendments) Order 2007 Article 2 (5)] 

 

20.69EA Application to court re: actions of supervisor

A creditor or the debtor who is dissatisfied with the actions (or inaction) of the official receiver as supervisor may apply to the court who can confirm, reverse or modify any decision of the supervisor, give him/her directions or make any other such order as it thinks fit. The supervisor may apply to court for directions in relation to any matter arising under the FTVA.

Note: [s263(3) and (4)]

 

20.70EA Employment of agents by supervisor

The official receiver in his/her capacity as supervisor can employ agents in connection with the realisation of any assets in the FTVA.

Note: [r5.49]

 

20.71 Supervisor's accounts and reports (amended August 2010)

The official receiver as supervisor must keep accounts and records of his/her acts in and in connection with the FTVA in particular all receipts and payments of money.

For cases where the official receiver agreed to act as nominee in respect of an FTVA before 6 April 2010, he/she in his/her capacity as supervisor, must prepare a progress report together with a summary receipts and payments account in respect of each 12 month period from the date of his/her appointment. A copy of this report and accounts must be sent within 2 months of the end of that period to the debtor and all the debtor's creditors of whom he/she is aware. If during this period no receipts or payments have been made a statement to this effect should be sent.

For cases where the official receiver agreed to act as nominee in respect of an FTVA on or after 6 April 2010, he/she as supervisor must send a report on the progress and prospects for the full implementation of the voluntary arrangement in respect of each period of 12 months ending with the anniversary of the commencement of the arrangement and within 2 months of the end of that period. The report is sent to-

a) the debtor

b) the debtor’s creditors who are bound by the voluntary arrangement and of whose address the supervisor is aware

The supervisor is released from sending a progress report if an obligation to send a final report under rule 5.50 arises in the 2 month period mentioned above.

Note: [r5.47 substituted in IAR 2010 by r5.47A]

 

20.71A Provision of information about time spent on a case (amended August 2010)

This only applies to cases where the official receiver agrees to act as nominee in respect of a proposal for an FTVA on or after 6 April 2010.

Upon request in writing by the debtor, or where the proposal has been approved any creditor of the debtor, the nominee or supervisor acting in respect of a voluntary arrangement must supply free of charge within 28 days of the receipt of the request, a statement comprising of the following details; 

          i. the total number of hours spent on the voluntary arrangement by the nominee and/or supervisor and any staff assigned to the voluntary arrangement.

        ii. the average hourly rate at which work carried out by each individual grade is charged; and

      iii. the number of hours spent by each grade of staff

This statement must cover the period beginning with the date of appointment of the nominee or supervisor and ending with the date the relevant person has completed any period as nominee or supervisor which is a multiple of 6 months, or the date on which the relevant person has ceased to act. No request for information can be made more than 2 years from the date in which the relevant person ceased to act in any capacity in relation to the proposal.

This provision was introduced by the IAR 2010 and covers all voluntary arrangements. Where the official receiver is nominee or supervisor in an FTVA the fees charged are either fixed (nominee fee) or a percentage of realisations (supervisor’s fee) so in practice it is unlikely that the official receiver will receive a request under this Rule.

[r.5.66]

 

20.72EA Supervisor's fee (amended December 2009)

The supervisor's fee is charged by the official receiver for work carried out in realising assets The fee is 15% of all monies realised. See also Chapter 36, paragraph 36.102.

Note: [Insolvency Proceedings (Fees) Order 2004, Schedule 2, IVA3]

 

20.73EA Fees costs and expenses

The fees, costs and expenses in respect of the performance by the official receiver of functions in relation to the bankruptcy and those of any insolvency practitioner trustee will be a first charge on any sums realised in the FTVA and those of the official receiver in relation to the FTVA a second charge.

Note: [r5.48]

 

20.74EA Priority of payment in a FTVA

The priority of payment from the FTVA is:  

  • the disbursements and fees within the bankruptcy,
  • the petitioning creditor's costs,
  • supervisors fee (see paragraph 20.72),
  • payments to creditors. These will be made periodically and will only be made when there is a reasonable amount to be paid.

 

20.75EA Where the debtor defaults on the FTVA

Where the debtor fails to keep to the terms of the FTVA it will be terminated (see also paragraph 20.76). The official receiver as supervisor, or one of the creditors, may take steps to make the debtor bankrupt but where the debtor is not able to make payments or has no assets the official receiver should take no further action after the termination of the FTVA e.g. where the debtor has been made redundant. If the debtor has significant assets or the debtor has deliberately not complied with the terms of the arrangement and is still in a position to make payments the official receiver should consider taking steps to make the individual bankrupt under section 264(1)(c).

Where the debtor has not complied with the FTVA because he is unable to do so the official receiver should report the reasons for the termination of the FTVA to the creditors.

Note: [s264(1)(c)] [s276]

 

20.76EA Completion or termination of the FTVA

When the FTVA is completed or terminated the official receiver must, within 28 days, send to all FTVA creditors and the debtor a notice that the FTVA has been fully implemented or terminated. This notice must enclose a report by the official receiver summarising all receipts and payments made in pursuance of the FTVA together with an explanation of any difference between the actual implementation of the FTVA and the proposals as approved by creditors. A copy of this notice and the final receipts and payments account should also be sent to the Secretary of State (see paragraph 20.78). The official receiver cannot vacate office until such copies have been sent.

Note: [r5.50]

 

20.77EA FTVA process flowchart

A copy of the FTVA process flowchart can be accessed via the intranet.  

 

20.78EA Individual insolvency register (amended August 2010)

The Secretary of State is required to maintain a register of all matters relating to bankruptcies and IVAs referred to as the individual insolvency register (IIR)

For cases where the official receiver agreed to act as nominee in respect of an FTVA before 6 April 2010 , where notice is given under rule 5.45 (see paragraph 20.62) the Secretary of State is required to enter onto the IIR –  

  • the name and address of the debtor,
  • the date on which the arrangement was agreed by creditors, and
  • the court in which the official receiver's report is filed.
  • the debtor’s gender and date of birth
  • any other name by which the debtor was known

For cases where the official receiver agreed to act as nominee on or after 6 April 2010, where notice is given under rule 5.45 or 5.50 the Secretary of State must enter onto the IIR-

a) the name and address of the debtor (subject to any order under the persons at risk of violence provisions regarding the address)

b) the date on which the arrangement was approved by the creditors

c) the debtor’s gender

d) the debtor’s date of birth

e) any name by which the debtor was or is known, not being the name in which the debtor has entered into the voluntary arrangement

f) that the official receiver is supervisor; and

g) the address of the official receiver; and

h) a statement whether the arrangement-

        i. was completed in accordance with its terms; or

       ii. failed

When the Secretary of State receives notice that an FTVA has been revoked, fully implemented or terminated all information concerning the FTVA will be deleted from the register.  For cases where the official receiver agreed to act as nominee before 6 April 2010 the deletion should take place as soon as practicable. For cases where the official receiver agreed to act as nominee on or after 6 April 2010, information should only be deleted  from the IIR where a period of 3 months has elapsed from receipt of the notice that the FTVA has been revoked, fully implemented or terminated.

Insolvency Practitioners Unit in Birmingham acts for the Secretary of State in maintaining the database on voluntary arrangements which feeds into the IIR. The IIR is available to the public through the Insolvency Service website.

Note: [r6A.1] [r6A.2A] [r5.45] [r6A.3] 

 

20.79 Persons at risk of violence (amended August 2010)

This applies to cases where a bankruptcy petition was presented, or a person agreed to act as nominee in a voluntary arrangement, on or after 6 April 2010

Where the disclosure or continuing disclosure to other persons (whether to the public generally or to specific persons) of the debtor’s current address or whereabouts might lead to violence against that individual or a family member who resides with him/her,  an application may be made to court under the Rules. The court may, on the application of the individual (in his capacity either as a bankrupt or as a debtor in an IVA proposal) the supervisor, official receiver (whether acting as supervisor or otherwise) or the Secretary of State, order that the current address be withheld from the Individual Insolvency Register and/or specified documents and/or other public sources of information. The official receiver must take care that any orders under these provisions are complied with.

For more information on “persons at risk of violence” provisions, see Chapter 4, paragraph 4.18A and Chapter 5, paragraph 5.45A.

[r6.235B] [r5.67] [r6A.2A]

 

20.80 Omission of information from statement of affairs (amended August 2010)

This applies to cases where a bankruptcy petition was presented, or a person agreed to act as nominee in a voluntary arrangement on or after 6 April 2010

The court, on the application of the nominee, the debtor or any person appearing to it to have an interest, may direct that specified information may be omitted from any statement of affairs required to be sent to the creditors in a voluntary arrangement where the disclosure of such information would be likely to prejudice the conduct of the voluntary arrangement or might reasonably be expected to lead to violence against any person.

[r5.68]

 

 

[Back to  Part 5 - Post bankruptcy arrangements where the official receiver is not supervisor]