Individual Voluntary Arrangement- Process

The Individual Voluntary Arrangement (IVA) is made by following a systematic and appropriate process. In the process, the creditors need to make a decision at the creditors’ meeting that has been held to discuss the IVA proposal. The return to the creditors is often higher as compared to what they will be compensated with in case of bankruptcy of the debtor in an IVA. The decision to accept the IVA is taken by vote. The claims of those creditors who have agreed to take up IVA either by voting directly or by proxy have to be reimbursed by 75%. If any of the given votes happens to be coming from ‘Associates’ of the business, then a second count has to be made which must be accepted by 50% of the non-associated creditors. The main objective of an IVA is to ensure a smooth and considerable flow of return to the creditors even in time of bankruptcy and is also used as a tool to enhance the debt payment ability of the debtors. Very recently, a number of debts remained unpaid due to the insolvency of the debtors which has adversely affected the interest of the creditors as well.

If the same circumstances continue over time, the creditors will no longer be encouraged to grant loans to the entrepreneurs and hence investment for generation of a new business unit or diversification of the present industrial units will not be possible at all. Hence, IVA is extremely significant in terms of debt repayment and it must be arranged by following the correct procedure.