May 2009
Part 7 Fees in IVAs and FTVAs
36.92 Introduction
(Amended February 2012)
Fast track voluntary arrangements were introduced from 1 April 2004 [Note 1][Note 2], to introduce a streamlined 'fast track' Individual Voluntary Arrangement 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 where an undischarged bankrupt wants to set up a FTVA, but the official receiver can only act in this capacity provided that the debtor is an undischarged bankrupt at the time the proposal is made [Note 3]. Where the individual is not an undischarged bankrupt he/she is not eligible for a FTVA, but may still seek the services of an insolvency practitioner to set up an IVA if he/she so wishes. See Chapter 20, part 6 and Case Help Manual Chapter “Fast Track Voluntary Arrangements” for full information on FTVAs and their implementation.
36.93 Accounting for FTVAs
(Amended February 2012)
From 1 April 2004 FTVAs have been accounted for within Finance Section by a system known as Kypera. Kypera enables 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 completed by the RTLUs and/or Finance Section. The input dealt with by RTLUs requires the back capture of data and it is therefore essential that the FTVA action sheets (IVA action sheet (OR)) are completed by the official receiver and accurately record all the events and dates. A separate FTVA action sheet should be completed by RTLU (IVA action sheet (RTLU)).
36.94 FTVA proposal – deposit for fees required
(Amended February 2012)
Article 7 of the Insolvency Proceedings Fees Order 2004 (“FO2004”) provides that where a proposal for an IVA with the official receiver acting as nominee (FTVA) is notified to the official receiver, the notification must be accompanied by a deposit of £315 as security for the payment of the IVA fees (IVA1 and IVA2 [Note 4]. This amount comprises a £15 fee (IVA1) for the registration of the IVA by the Secretary of State and a £300 fee (IVA2) for the official receiver’s nomination fee, payable when he/she agrees to act as nominee. This deposit must be used to discharge the fees IVA1 and IVA2 as detailed above [Note 5] (see Chapter 20, part 6, particularly paragraphs 20.52EA and 20.53EA). On receipt of the £315, the official receiver must complete the Nominee Fee Receipt Form (Annex F) (see paragraph 36.97) and send it to Finance Business Services (address details included in Annex F).
36.95 Registration fee
Where a FTVA proposal is sent to the official receiver, a deposit of £15 as security for fee IVA1 should accompany the proposal. This fee is for the registration of the FTVA on the individual insolvency register should creditors accept the bankrupt's proposal [Note 6].The deposit for the registration fee will be held by Finance Section until the FTVA proposal has been accepted by the creditors. Once accepted the FTVA will be registered by the Secretary of State and the fee will be charged. The deposit will be used to pay the fee. For details on treatment of the registration fee should the official receiver decline to act as nominee, or the creditors reject the proposal, see paragraph 36.98 and 36.99.
36.96 Nominee's fee
The FTVA proposal must also be accompanied by a deposit of £300 as security for fee IVA2, the nominee fee [Note 7]. The nominee fee is charged by the official receiver for acting as nominee [Note 8].The deposit for the nominee fee will be held by Finance Section until the FTVA proposal has been accepted by the creditors. Once accepted, the nominee fee will be charged and the deposit will be used to pay the fee. For details on treatment of the nominee fee should the official receiver decline to act as nominee, see paragraph 36.98.
36.97 Receipt Form for FTVA deposit
(Amended May 2010)
On receipt of the £315 deposit for the registration fee and nominee fee, the official receiver must complete the Nominee Fee Receipt Form (Annex F) and send it to Finance Section. Finance Section will then set up the FTVA account on Kypera.
36.98 Dealing with the deposit where the official receiver declines to act as nominee
If the official receiver declines to act as nominee of the FTVA, the deposit for the nominee fee (£315) shall be refunded to the person entitled to it [Note 9], i.e. the person who paid the deposit. The same applies to the balance of any deposit left after deducting Fee IVA2 (£300), where the official receiver agrees to act as nominee of the FTVA but the proposal is rejected by the bankrupt’s creditors [Note 10]. The deposit should only be refunded where it was made from third party funds. If the deposit for the fees was paid by the bankrupt, the funds will be retained, and credited to the bankruptcy estate. See also Chapter 20 paragraph 20.58EA.
36.99 Rejection of FTVA by creditors - treatment of proposal deposit
(Amended February 2012)
Where the official receiver agrees to act as nominee in the FTVA but the proposal is rejected by the bankrupt's creditors, the nominee fee (fee IVA2, £300) is retained as the official receiver has carried out the necessary work to justify charging this fee. The deposit for the registration fee (fee IVA1, £15) will be refunded 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 Business Services (email Finance.Planning@insolvency.gsi.gov.uk) must be informed of the creditors' decision, to allow them to properly account for the deposit for fee IVA1[Note 10].
36.100 Banking of FTVA deposit
(Amended February 2012)
The official receiver may receive the FTVA deposit of £315 (the deposit for the registration fee and nominee fee) either in cash, or by cheque payment, payable to The Insolvency Service (which should be forwarded to Jaswinder Kaur at Finance Business Services, 3rd Floor, Cannon House, 18 Priory Queensway, Birmingham, B4 6FD). The deposit may also be paid directly by electronic payment into the Insolvency Service account set up for this, details as follows:
Bank Name: Citibank
Sort Code: 08-33-00
Account number: 2307626
Account name: GBS RE INSS FTVA
The deposit must not be credited to the estate account (other than in the specific circumstances as outlined at paragraphs 36.98 - 36.99).
36.101
FTVA deposit received in cash or by cheque(Amended February 2012)
If the official receiver receives the FTVA deposit in cash, this must be paid into the Citibank account (see paragraph 36.100) 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 Business Services who will pay the cheque into the Citibank account (see paragraph 36.100). The official receiver should not take any further action in respect of the FTVA proposal until Finance Business Services have notified the official receiver that the cheque has cleared. This will normally be 5 days after receipt of the cheque by Finance Section.
Where the FTVA deposit is paid by direct transfer, this should be paid to the Citibank account (see paragraph 36.100). Finance Section will pick up the credit from the Nominee Fee Receipt form (Annex F), sent by the official receiver, and the bank reconciliation.
36.102 Supervisor's fee
The official receiver’s supervisor fee (IVA3) is charged by the official receiver for the performance by him/her of the supervisor functions in relation to an IVA/FTVA. The fee is calculated as a percentage of any monies realised while he/she acts as supervisor, currently at the rate of 15% [Note 11]. “Monies realised” represented by monies paid into the FTVA (from whatever source) could include third party monies.
36.103 Reduction of administration fee where official receiver acting as supervisor in creditor approved FTVA
(Amended February 2012)
Where proposals made by a bankrupt for an FTVA, with the official receiver acting as supervisor, are approved by the bankrupt's creditors, the administration fee B1 (£1,715) is reduced by 50% to £857.50. Any payments made in respect of fee B1 which exceed the reduced amount shall be rebated to the estate of the bankrupt by Estate Accounts and Insolvency Practitioner Services (EAIPS) and included as an asset in the FTVA [Note 12] unless the fee has been paid by a third party, in which case the amount of the rebate should be refunded.
36.104 Dealing with the petition deposit where annulment follows approved FTVA
Following the approval of the FTVA, the court will annul the bankruptcy order on the application of the official receiver (see Chapter 20 paragraph 20.66EA). The petition deposit may be returned to the person who made it (see paragraph 36.63)
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 returned to the bankrupt, except where the relevant assets are insufficient to discharge the fees for which the deposit is security, when it will be retained [Note 13].
36.105 Fees payable by the court to an insolvency practitioner appointed under section 273
(Amended February 2012)
Where a court appoints an insolvency practitioner under section 273(2) IA86 to prepare and submit a report under section 274 IA86 (a report stating whether the debtor is willing to make a proposal for a voluntary arrangement), upon submission of the insolvency practitioner’s report, the court will pay the practitioner a fee of £450 (inclusive of VAT, paid from the deposit ordinarily passed to the official receiver on the making of a bankruptcy order [Note 14].
36.106
Expenses following default in individual voluntary arrangementIn a bankruptcy case, if a bankruptcy order is made on a petition presented by the supervisor as a result of the bankrupt’s failure to fulfil his/her obligations under a voluntary arrangement [Note 15], the expenses properly incurred as expenses of the administration of the voluntary arrangement become a first charge on the bankrupt’s estate [Note 16].
36.107 Debtor’s petition when voluntary arrangement in force
If there is a voluntary arrangement in force, and the debtor subject to the voluntary arrangement makes an application to file for bankruptcy whilst it is still in force, the expenses properly incurred as expenses of the administration of the voluntary arrangement become a first charge on the bankrupt’s estate [Note 17].
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