I am a creditor ...

[lisa774]

I am a creditor and the person who owes me £18k has entered into an IVA (he lost a court case we took him to for substandard building works). The company failed to invite me to the creditors meeting which they have admitted, falsely told me that my vote wouldn't have made a difference so there was no point in appealing, which they have admitted in writing and offered me £300 in compensation. Do I have any further recourse or should I accept the money?

[Shaun Vickery]

It will be interesting to see what some of the other experts, who will be better positioned than me in regard to your specific query, but I suspect that they have acted inappropriately if they did not disclose the debt to the firm who is supervising their insolvency. They may (or may not be) right that your vote may not have made the difference but you certainly need to have your interest noted. I don't believe that they should be offering you any money directly either as the whole purpose of an IVA is that all the creditors are treated equally in terms of what they are paid back. I'd suggest checking who their supervisor is (you can obtain this from the Insolvency Register which is public information) and contact them directly. I'll be interested to see what other people say.

[Foggy]

Is it the IVA provider who has made these admissions to you, or the debtor ?

[Shaun Vickery]

Good question. I may have interpreted this wrongly.

[lisa774]

Hi both,
The IVA company knew of the debt owed to me but they sent the info to completely the wrong law firm address which they have admitted to. They also wrongly advised me that my vote wouldn’t have counted and admitted that was incorrect too. It is the IVA company that offered compensation. I
was informed that even though this happened it is too late to change the arrangement.
Thank you in advance.

[Foggy]

Whether or not your vote would have made a difference is a moveable feast. If, for instance, you are a 'minor' creditor (with less than 25% of the debt compared to those who vote ) it might not have made a difference. But, if, say, you were the only one who actually bothered to vote (or has more than 25% of the debt of those who vote), you could have insisted on amendments or scuppered the whole arrangement ! There is no way, as you were left out, that the IVA provider can say whether you would have made a difference or not as, if rewinding time, they cannot predict who might or might not have voted in a different time stream where you were correctly included ! (All getting a bit Star Trek !! ).

Their offer of compensation is an admission of negligence and, I would imagine, you accepting this would be in 'full and final compensation' and you might then be unable to claim your rightful share of the dividend if you were to be now included --- this might be more than £300, albeit stretched over a 5 or 6 year period.

I am not trained in insolvency, but I would think that the IVA, being based on a lie of ommission, could still be challenged. You would need the advice of a lawyer with experience of insolvency law. I understand, from historical posts, that Lisa Thomas (a forum member who is also and IP) might have a contact here. Hopefully she will comment in due course.

[lisa774]

Hi,
Sorry I should’ve been clearer my debt was included in the IVA in Nov 2018 but I wasn’t invited to the meeting where this was agreed and had no knowledge of it until after the event therefore I couldn’t comment or agree to what was proposed at that meeting. I was one of the largest creditors being owed 18.5 K one other being owed 27K and the remaining 6 owed an average of approximately 2K. What is not clear is whether the company are offering £300 instead of the IV a payment or in addition to. The original ‘agreement’ stated payment of 11.81p/ pound which was quickly revised down to 9.98 which would have given a return of around £1,800 over six years. I have received £92 since the IVA date November 2018. Apparently there is now a hold up as HMRC need to submit a claim. This is clearly not something I would’ve agreed to if I had been at that original meeting as it leaves me with serious losses. Should I pursue more compensation as they have made an arrangement without my agreement that leaves me financially compromised?
Thank you so much for taking the time to respond.

[WallE]

Who's the IVA company, out of interest? It's odd to receive an offer of compensation in this way. From the day you became aware of the IVA you would have had 28 days to challenge it, but I suspect you probably were not made aware of this. Did you formally complain to be offered the £300 or did they offer it out of the blue?

[lisa774]

Hi, thank you for your interest. I was told originally that my vote wouldn’t have made a difference, and I wasn’t made aware of the 28 days to object. They had the call recorded so they knew I was misinformed. I did make an official complaint. I’m not sure it would be appropriate to name them on a public forum.

[Lisa Thomas]

My comments are as follows:

1. You could challenge the validity of the IVA and as a result it could potentially be voided. You may need the help of a specialist solicitor for this. I can recommend one but you will have to pay their costs so you need to weigh up whether this will be beneficial to you.

You will also need to bear in mind that the debtor will be back to square one and the only procedure relevant to them may well be Bankruptcy.

2. If you could wave a magic wand and go back in time, I suspect the alternative to the IVA would have been Bankruptcy then too, so even had you been given the proper notice of the original meeting and the IVA was rejected based on your voting power, you may well have found that there would be less or no dividend in the Bankruptcy that what is being considered/paid in the IVA.

Have a look at the original Estimated Outcome Statement that should have been included in the original IVA proposals and would have been compared to the IVA. This should show you whether any dividend was expected in Bankruptcy.

Is this a 5 year IVA? If so, bear in mind that in Bankruptcy income payment contributions are only made for 3 years which is often why the IVA's are more attractive with higher dividends than Bankruptcy. Also the costs in Bankruptcy are usually much higher than that of an IVA.

3. I cannot comment on whether or not you should accept the £300 compensation offered as I do not know whether any terms are attached to it?

I suspect its a goodwill gesture to encourage you not to make a formal complain against the IP.

Feel free to send me a copy or paste the wording on the forum for us to look at.

Overall I suspect that although this is frustrating and disappointing for you, the IVA was possibly the best option for you to get any money back from the debtor.

[lisa774]

Hi, thank you, that’s helpful. I am unable to attach a photo of the email but managed to copy the text as follows (anonymised)
I have reviewed the telephone call that took place between our office and yourself on 27 November 2018. I can confirm that on this call you were provided incorrect information with respect to how your vote would have affected the approval of the IVA and for this I would apologise. Unfortunately, as the 28-day period wherein you were able to challenge the IVA has now passed, this option may no longer viable. Should you wish to review other options that may be available, you would need to seek your own advices.
I note in your previous email you stated you would have preferred Mr XXXX to go bankrupt “to prevent him from being able to shirk his financial responsibilities.”.
It is important to note that had Mr XXXX been made bankrupt, it is likely he would have been discharged from this within 12 months and would have paid less through an Income Payments Agreement, typically put in place for three years, than through an IVA. Based on the Estimated Outcome Statement (that was attached to Mr XXXX original proposal) creditors would have been unlikely to receive any payment from the bankruptcy estate.
As a gesture of goodwill, and agreement of the resolution of your complaint, I would like to offer you £300 for inconvenience caused by the incorrect information provided to you that prevented you from being able to challenge the IVA. If you wish to accept this settlement amount, please confirm by email that your acceptance is in full and final settlement and include your bank details, so that I may arrange for the payment to be made

[Foggy]

He is a bit slack with his wording there ---- first he states that the £300 is compensation for the error, then continues to say that this £300 is in full and final settlement --- in full and final settlement of what ? Are you still to receive dividends in addition, or are you forfeiting the dividends for the £300 ??

If your debt is in the IVA, why have they not already got your payment details ?

[kallis3]

I would not accept anything - the IP is in the wrong here as far as I can see.

[Lisa Thomas]

It is a bit ambiguous as they have called it goodwill in one sentence and final settlement in the next.

I recommend you ask them to clarify what they mean by final settlement. I suspect they meant it as regards taking your complaint any further.

They have advised you that, as suspected, no dividend was anticipated in any Bankruptcy so assuming their response clarifies this I think you can accept the goodwill gesture and move on.

[lisa774]

Thank you all for your advice and input. The company have advised the £300 is a goodwill gesture and will not affect IVA dividends (should any materialise). I guess I have no option but to accept and move on. I think investing in legal support would not bear any additional benefits however frustrated I am with the situation! Thank you again, you have all helped me come to a decision!
Best wishes
Lisa