Understanding IVA Interim Orders

When a person has decided that an Individual Voluntary Arrangement (IVA) is their debt relief option, they will instruct their Insolvency Practitioner (IP) to help prepare an Individual Voluntary Arrangement (IVA) proposal.

This process generally takes up to 8 weeks to complete.

During this 'setting up' period, the client is not actually protected by the Individual Voluntary Arrangement (IVA) agreement.

The IVA will only become legally binding when the creditors at the ‘Creditors meeting’ have agreed it.
Therefore, in extreme cases, it is possible that creditors will attempt to commence legal action against the debtor prior to the IVA creditors meeting.

Faced with this situation the client has the option of applying for an 'Interim Order.'
An Interim Order is a court order and is applied for at the client's local County Court, and when the Interim Order is lodged in court, the client is protected from legal action by the creditors, for a set time period, usually beyond the date of the IVA creditors meeting.
When the Interim Order is in force, the IVA process can continue towards the creditors meeting without the threat of a particular hostile creditor.

There is a court fee of approx. £150 for each proposal, i.e. an Interim Order Application for a joint IVA would be £300, and therefore should only be applied for when there is a threat of legal action being taken against the client.

Up to 2005 Interim Orders had to be applied for in nearly every IVA case as a matter of routine. However as Interim Orders take a while to put in place they have now diminished to the point where they are not normally required. There is an exception to this; where there are aggressive creditors taking legal action up to and including a bankruptcy petition. Where a debtor, usually on the advice of his IP, believes that such a creditor petition is not in the best interests of all the creditors then an Interim Order request can be presented to the Court to stop all actions for a specific period of time.

The Court must be satisfied that the debtor

- Has a suitably qualified IP to act for him/her.

- Reasonably intends to make an IVA proposal to creditors

- Is an undischarged bankrupt or was able to petition for bankruptcy

- Had not made an Interim Order request within the previous 12 months

Interim Orders are usually designed to last for a period of 2-4 weeks so an IP and debtor need to work very quickly to get IVA proposals before the Court (in an attempt to get a bankruptcy annulled) or to all creditors to gain overall approval for the IVA.