Hi.my friend has a clause in their IVA that states that funds paid in will be given priority to funding a BR if it becomes necessary and these will take preference to any fees or creditor payments.The IVA is about to fail after 1 year.My friend has queried the £495 that should be used to fund BR and has been told the following:
"Although your Proposal states that we are to retain funds for your bankruptcy petition, the usual procedure is that I will convene a meeting of your creditors and they will decide whether or not funds received from you will be used to petition for your bankruptcy, or distributed to themselves.
More often than not, the outcome of the meeting is that they will choose to issue a Certificate of Termination to you, and the funds you have paid into your Arrangement will be distributed to your creditors. However, now and again they will vote to fund your bankruptcy petition. The cost of petitioning for your personal bankruptcy is, as you quoted, around £495; however, there are extra legal requirements involved should your Insolvency Practitioner refer you for bankruptcy, and this incurs additional charges which increase the cost of your bankruptcy to approximately £2,000"
We are both VERY confused..can anyone explain what this means..it seems incredible that the wording in the proposal can just be changed because they feel like it ????
It sounds as if your friend's IP is trying to wriggle out of paying of the bankruptcy - but if you could post the exact wording of the clause you refer to that would be helpful. You would also need to ensure that there were no modifications at the creditors meeting which sought to overide that clause.
Thanks for yr reply Melanie..
The wording is as follows:" The Supervisor shall set aside, and at all times retain, sufficient funds for the purpose of petitioning for my bankruptcy, should this be necessary, and such funds shall rank ahead of the Supervisor's fees"ding is as follows"
There was NO modification at the creditors meeting charge regarding this clause
What do you think would be the best course of action.Tell them that they have GOT to fund the bankruptcy ? Or else ? LOL
Thanks again
OK - so that says that he/she needs to retain funds ahead of Supervisory fees - and as you say that the IVA has failed after the first year, you may find - especially if he/she is paying a low contribution, that the IP has only drawn nominee's fees and therefore has no money left in the kitty to pay for bankruptcy.
I cannot see why they are bothering to call meetings of creditors - if the proposal makes it clear what they have to do - but I am concious that I do not have all of the facts of this case to hand to be able to advise properly. Why not get your friend to ask the IP why they feel a creditors meeting is approprate, and under what authority in the IVA proposal allows this to occur.
Thanks...She has paid nearly £3000 in the past year.The firm is Wilson Phillips.Thanks for the advice,it does seem a little pointless.My gut feeling is that this is a sneeky attempt to get out of the payment and keep it to themselves.Not very professional and we won't let them get away with it if at all possible.My gut feeling is that she wont have to pay the fees in the end.Does the IP normally do all the paperwork etc..or should she begin preparing them on the insolvency website ? I won't ask any more Q's Melanie after this one, seems unfair to monopolise you.We are both so VERY grateful for yr advice
No problem - ask as many questions as you like, but it may be the morning when I get back to you! Off to bed in a minute. I'm assuming you are from Derby and that is my home town (Up the Rams!) so am always happy to help!
If you could find out how much the nominee's fee was, and exactly how much she has paid over to date, I could probably guesstimate how much money might be available to put towards the bankruptcy petition. If the Supervisor is not going to petition, then your friend will have to do the paperwork herself and pay the £495 fee I am afraid.
Had this reply when asked for clarification re the funding of BR..clear as mad...states it's IP's discretion..then states it's up to the creditors.Still dont see how they can just "ignore" the clause that states that all funds for the BR will take priority.My friend had paid more than £3000 in to the IVA..so we believe as per the clause she will NOT have to fund her own BR.To be honest it's becoming a matter of principle, and i would like a Court or the FSA to test this and find out for sure..the clause is there in black and white, what makes any IP firm think they can just change the meaning when it suits them..corrupt if you ask me !
Here is the reply:I’m sure you will have received a copy of the Variation Proposal which has now been circulated to you and your creditors. I appreciate that, as standard, your Proposal states that the Supervisor is to reserve funds for your bankruptcy; however this is at his discretion, and so he has convened a meeting of your creditors in which they will vote for or against petitioning for your bankruptcy.
Your bankruptcy will of course still be permitted to ‘go ahead’, but it is down to the creditors to decide whether or not their funds will be used to pay for the petition.
I have discussed the above with your Insolvency Practitioner and he confirms that this is the correct procedure, and that retaining funds for bankruptcy is at his discretion, and is not a requirement of the Arrangement. Creditors will therefore be left with the decision as to whether or not to fund your bankruptcy.
Should you require any further assistance in this matter, please contact me.
Can ANYBODY help ..or give any personal ecperience of this issue.please..she is at her wits end.As for the comment /question..why my friend doesn't just pay the £ 495..well do you think it could be because she is in financial difficulty..just a thought ?? (GIVE ME STRENGTH!!)
I do think this is bad that they are trying to wriggle out of their responsibilities.
However, I do think that I would do what Chris suggested last month - stop paying in and use that money to fund her own br. That way it's nothing to do with the creditors and she can probably get it sorted out sooner.
My IVA specifically says that no funds will be held back, so if the worst comes to the worst, I would have to fund my own.
Have you thought about posting this on the BR site? They may be able to help you more with it.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
If the IVA says they have to petition then they have to petition. I don't see where the word discretion comes into it. I suggest that your friend advises his/her IP that she is going to seek legal advice and that she needs a definitive answer as to whether the IP get the idea he can use discretion from.
My friend has had the latest bit of nonsense from her IP, a "Report on the meeting of creditors for cessation of a Vol Arrangement"
On 24th July..the following resolutions were put to creditors:
1. That the arrangement be terminated and the Supervisor is not to petition for the Debtors bankruptcy.
2. That the moneys drawn in respect of the Nominee's fees to be retained by the Supervisor notwithstanding the global cap fee of 30% of realisations in modification number two and the remaining balance distributed to creditors
No creditors were present by Lloyds TSB voted in favour of both resolutions
What the hell are they on about ? They are to me simply trying to blind us with science.."global cap fee..modification number two ??"
She is going to fight this to the bitter end and will INSIST they either return the money or petition for her bankruptcy as per the original proposal.She would not have signed it if the clause re bankrupty costs wasn't there in the first place.Amazing that they think they can just opt out because it suits their unethical policies ! Sickening actually
Thanks for any comments or advice
PS.The trouble is..they have got her over a barrel.She needs the money to petition herself or have them do it, and can't hang around for ages just waiting for the creditors to start getting nasty.The action of her IP appall me.They simply say..that ..yes...the clause is there but NORMALLY we do this etc...what sort of justification is that ? None !
Yours in hope
I sympathise with your friend, but feel that there is little point in her fighting this as the IP's revised report has the support of his/her creditors.
