Personal insolvency

Personal insolvency

General

There are two main types of insolvency procedure applicable to individuals:

•
individual voluntary arrangements, and
•
bankruptcy

Individual insolvency is:

•
governed by the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, and
•
subject to the supervision of the High Court (Chancery Division) or designated county courts

Individual voluntary arrangements (IVAs)

An IVA allows an insolvent debtor to obtain a moratorium on their debts and to repay their creditors in a structured way. It is overseen by a nominee, who must be a qualified insolvency practitioner, and may be structured as:

•
a composition in satisfaction of the debts, or
•
a scheme of arrangement

The nominee prepares a proposal for the IVA, setting out what payments are to be made and from what assets. This must be approved by 75% or more of creditors. Once approved, the nominee becomes the supervisor of the arrangement, and any bankruptcy is annulled. All creditors who could vote at the meeting are bound.

The supervisor administers the IVA, paying monies to creditors as agreed. The supervisor must

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