Failed IVA / BR - Options

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jame$bear

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Post by jame$bear » Tue Mar 12, 2019 2:44 pm
Been in an IVA for 9 months, made about £30k of contributions to date and suddenly lost my job, which was a very specialised position specific to that company. Any new job will be for far less money; to the point where contributions will be unacceptable, I've been told.

And so, with heavy hearts we're looking to sell our property and propose a variation (hmrc main creditor), which will result in a div of about 27p in the £. (something like 20p less than the original div). To be honest, we have an 85% equility release clause in Y3, I think the writing is on the wall for our house whatever happens.

My question is - if hmrc reject the variation and it all leads to BR, who are the trustees of the BR at that point?

My fear is whether or not the IVA co are going to be acting in our best interests in terms of pulling out the stops to get the variation presented in the best light and agreed. From what I've seen, trustee fees were something like 10k if BR happens and supervisors fees were almost identical if IVA varation is approved.

Can/should I do my own BR if it comes to it? Should I make it known beforehand? Or perhaps is it never the same co who do the BR in any case when an IVA fails? So many things spinning around my head...

Foggy

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Post by Foggy » Tue Mar 12, 2019 3:24 pm
Fees in BR are usually a lot higher than those in an IVA. As to who gets the job as trustee -- this will depend on who the OR appoints. Whether HMRC petition for BR or you do it yourself (£750 each in court fees) you will not choose.

Remember that BR is a lot more intrusive and you could end up making payments for 3 years, as well as potentially losing the house.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
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jame$bear

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Post by jame$bear » Tue Mar 12, 2019 4:44 pm
Thanks foggy. Fingers crossed the variation goes through. Everyone ends up with more money vs BR, but you just never know do you!

Lisa Thomas

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Post by Lisa Thomas » Wed Mar 13, 2019 12:38 pm
The Official Receiver will be your Trustee initially. They can then farm it out on a rota to a private IP to replace them, or creditors can vote for a replacement but most cases are dealt with in-house by the TIB.

The costs will be more than £10k in Bankruptcy if the property remains to be dealt with.

The Supervisor will also continue to deal with any assets that form part of the IVA trust and close the IVA down.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

jame$bear

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Post by jame$bear » Thu Mar 14, 2019 5:43 pm
Thanks Lisa.

Variations sent off today for F&F... my wife's div was originally due to be 32% and the offer provides at least 23% (based on lower end of house sale value). Mine was 45% and the offer provides at least 25%.

Alternatively, BR yields 15% for my wife and 17% for me, with trustee fees of 10k each, 7k each legal, 6k each OR, etc.

So I guess it now comes down to whether or not HMRC want to "punish" us rather than take the higher amount by allowing us to introduce our property into the IVA asap. Does anyone have any thoughts or experience on this point, given these figures? We're not in bad standing with them or anything, all returns are up to date, etc.

My wife is in absolute tatters over this, with a complex heart problem and years of documented depression and anxiety. I'm so worried about her, anything anyone can offer me here to give any hope would be fantastic.

jame$bear

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Post by jame$bear » Fri Mar 15, 2019 11:23 am
...I have another quick question if anyone knows. If a variation is rejected and there has been no breach, does the IVA automatically fail at that point or do you have the option to continue making payments for as long as you are able?

Foggy

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Post by Foggy » Fri Mar 15, 2019 11:43 am
Depends on the wording and reason for the variation. Most will allow the IVA to continue as before, if the variation was, say, a full and final offer. If the variation was something like "Halve my payments because I cannot afford to continue", you are basically saying that you can't pay if the variation is refused ... so it might be failed at that point.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

jame$bear

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Post by jame$bear » Fri Mar 15, 2019 12:03 pm
Hmmm. That's a worry.

It says:

If the proposed variations are not approved it is clear that the Debtor will not be able to fulfil the terms of the Arragement. Standard Condition 71 provides that in such circumstances we seek a decision of creditors to decide whether we should:

1. Issue a certificate terminating the Arrangement by reason of the Debtor's breach.
2. Present a petition for the Debtor's bankruptcy.
3. Take no action.

The enclosed decision form sets out the above as options. Please indicate your preferred course of action if sufficient approval of the proposed variations cannot be obtained.

----------------------------

We signed the variation yesterday and I believe they were posted out in the late afternoon.

kallis3

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Post by kallis3 » Fri Mar 15, 2019 12:14 pm
Fingers crossed it goes ok.
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

jame$bear

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Post by jame$bear » Fri Mar 15, 2019 12:33 pm
Anyone know if I can cancel the variation after it's been sent (yesterday)?

I've e-mailed our IP for clarity on whether bankrupty would start automatically should they reject the variation and choose option 2

kallis3

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Post by kallis3 » Fri Mar 15, 2019 12:38 pm
I doubt it will be automatic - your IVA will have to fail first.

You can always ask your company to withdraw your offer of variation.
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

Foggy

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Post by Foggy » Fri Mar 15, 2019 1:05 pm
You can withdraw the variation before the creditors meeting --- but you are going to have to come up with a "Plan B" as the indications are still, presumably, that the arrangement will fail without the variation.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

jame$bear

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Post by jame$bear » Fri Mar 15, 2019 1:23 pm
Thank you both - then at least it can be withdrawn. I've not had a reply yet - I just assumed that if the variation was rejected then we could continue on until such time as we can't pay any more. To date, no breach.

I've already told the IP that we would be able to make payments up until August - but they suggested we stop, with March being the last one and no payment needed for April.

I'm beginning to smell a rat - if we don't pay in April, then we are in breach and this BR clause in the variation kills us if it's rejected.

So, whilst I've been honest with them about not being able to get the same level as income as before, I'd at least have until August to really try to before giving up!

Foggy

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Post by Foggy » Fri Mar 15, 2019 2:19 pm
Fri Mar 15, 2019 1:23 pmjame$bear wrote:
Thank you both - then at least it can be withdrawn. I've not had a reply yet - I just assumed that if the variation was rejected then we could continue on until such time as we can't pay any more. To date, no breach.

I've already told the IP that we would be able to make payments up until August - but they suggested we stop, with March being the last one and no payment needed for April.

I'm beginning to smell a rat - if we don't pay in April, then we are in breach and this BR clause in the variation kills us if it's rejected.

So, whilst I've been honest with them about not being able to get the same level as income as before, I'd at least have until August to really try to before giving up!
If the IP has agreed a payment break (get it in writing) then there will be no breach. My variation was on grounds of inability to continue and, because of this I had a payment break while they were preparing and deliberating. In my case I was fortunate and the variation accepted.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

jame$bear

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Joined: Fri Jun 15, 2018 10:24 pm

Post by jame$bear » Fri Mar 15, 2019 2:28 pm
That would be fair point - but unfortunately HMRC added a modification when the IVA was setup which explicitly removes any form of payment break! Still awaiting a reply from them. Will update when I do!
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