Role of an IVA chairman
Summary: This article highlights the role of the IVA (Individual Voluntary Arrangement) Chairman of the creditors meeting and the chief responsibilities such a position involves.
Meeting of creditors
The Chairman of the IVA calls and chairs a meeting of creditors. What actually occurs at a Meeting of Creditors (MOC) may surprise many who are unfamiliar with the process. In the vast majority of cases, there is no actual physical meeting of creditors as such. The debtor proposing the IVA is not obliged to attend the MOC either but needs to be contactable during the day on which the meeting is scheduled and particularly at the time of the meeting. Usually it is sufficient to be available by phone so that the chairman of the meeting may communicate the progress of the meeting or clarify issues that may be raised by creditors.
Generally the MOC is chaired by the Insolvency Practitioner (IP) who is the debtor's Nominee in respect of his or her IVA proposal. However the IP may authorise a suitably qualified and experienced member of staff to chair the MOC. MOCs are typically virtual meetings and are not an occasion of confrontation and dispute between debtor and creditors.
The wishes of the creditors are often conveyed to the chairperson of the meeting by way of written communications. These are usually transmitted to the chairperson by mail, by fax or by e-mail including e-mail attachments. These communications mainly consist of proofs of debts, modifications to the proposals which creditors require and proxy forms which empower the chairperson to vote for or against the proposal in accordance with the stated instructions of the creditor.
The IP therefore has a lot to do but will act as an honest broker in all dealings with the creditors and the debtor. For example, different creditors may propose different and conflicting modifications and the IP has to reconcile such modifications, communicate with the debtor and the creditors, while allowing all parties sufficient time to consider their position and decide whether to accept the modifications or not. Over 75% of voting creditors, as measured by the amount of their debt, must vote to accept the IVA before it can be deemed approved at the MOC. All creditors do not exercise their right to vote, but more than 75% of those who do must accept the IVA for it to be approved. The debtor on the other hand may not be willing to accept the modifications and can withdraw the IVA proposals. The IP may adjourn the MOC for up to two weeks to see if agreement can be reached not just between the debtor and the creditors but also between one creditor and another where conflicting modifications have been proposed
At the conclusion of the MOC or adjourned MOC, the IP has four days to prepare and distribute what is called The Chairman's Report of the Meeting of Creditors. This is sent to all creditors, the debtor and the relevant court which has jurisdiction in relation to the MOC. This report records the decision of the MOC and shows how creditors voted. It also lists the modifications and their projected effect on e.g. the dividend which creditors may expect to receive.