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  • Individual Voluntary Arrangements

Individual Voluntary Arrangements


"This is the ultimate statement of where the law on IVAs is to be found in our great common law system"

A 10.3% VAT charge will be added to this product at the checkout as it includes a CD-ROM.

Individual Voluntary Arrangements - A clear, authoritative guide, available as a print or online subscription, that has become an essential reference tool for all debt advisers, insolvency practitioners, lawyers advising insolvency professionals and creditors or debtors during the preparation of an IVA or after its approval.

Written by a team of experts in the field, the looseleaf format with its regular updates ensures you are kept fully informed of the relevant case-law and changes to practice and procedure. Recent updates have focused on VAT reclaims after the decision in Paymex, issues arising out of PPI claims and the involvement of secured creditors. All the latest developments are examined in detail and invaluable, practical guidance is provided to navigate you through this complex area of law.

The work includes a CD-ROM, containing professionally drafted, up-to-date precedents and specimen IVA proposals, all in Microsoft Word format. Stripped of annotation and ready for individual adaptation, this alone will save you hours of drafting time.

To arrange your FREE trial to the online service or to find out how a print or online subscription to APIL Personal Injury Law, Practice and Precedents will benefit your day-to-day work contact our Account Management Team today.

"This is the ultimate statement of where the law on IVAs is to be found in our great common law system. There is nothing more authoritative. This Jordans loose leaf reference work is a binder which practitioners and the judiciary will place most reliance on ... 'Individual Voluntary Arrangements' from Jordans is a world leader for personal insolvency matters ..."
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Phillip Taylor and Elizabeth Taylor of Richmond Green Chambers

"Indispensable ... if you are going to have any dealings with voluntary arrangements ... this is the book to have"
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"an accessible and easy to use source"
Business and Assets

"a must for any serious practitioner of personal insolvency law."
Insolvency Lawyer

While I never thought that the Paymex guidance, set out in D15, was set in stone and would have to be revisited at some stage, I never thought that the issues would arise in relation to post-completion certificate continuing trusts. However, the recent decision of His Honour Judge Hodge QC (sitting as a judge of the High Court) in Green v Wright [2015] EWHC 993 (Ch) has caused much thought as to the meaning and effect of a completion certificate and the effect that the issuing of the certificate has on any continuing trusts, as understood by the decision of the Court of Appeal in Re NT Gallagher & Son Ltd [2002] 1 WLR 2380.

The facts were simple, and are set out in more detail in the text, at A5[11B] and A17[69A]. The terms of the IVA did not provide for termination of the IVA trusts on completion. The debtor complied with his obligations. A completion certificate was issued. The proceeds of a PPI mis-selling claim were recovered post-completion. The claim was an arrangement asset, and the proceeds would have been payable into the IVA for the benefit of creditors had they been recovered prior to completion. The supervisor relied on the continuing trust principles as outlined in Gallagher to support the contention that the trusts powers continued, so as to allow him to collect the money and distribute it to creditors. His Honour Judge Hodge QC disagreed. Gallagher did not apply, because that applied on bankruptcy/liquidation, not successful completion. A completion certificate was just that: completion. Once the IVA has been satisfactorily concluded by the issue of a completion certificate, the debtor was released from all debts subject to the arrangement and that release applied for all purposes of the arrangement, thus bringing to an end the trusts affecting the arrangement assets. His Honour Judge Hodge QC further observed that if the debtor and the supervisor wished to make specific provision for the supervisor’s powers to continue after the conclusion of the IVA in relation to possible PPI mis-selling claims, then the remedy was for the supervisor to insist on a special agreement with the debtor to the effect that any moneys received from such a mis-selling claim should all be paid to the supervisor, and distributed to the creditors, notwithstanding the conclusion of the IVA.

It seems to me that this has wider ramifications than merely in relation to PPI mis-selling proceeds. For myself, on the narrow issues of the case, it is difficult to see how the terms of the IVA could be interpreted in the way set out in the judgment. It seems to me that it encourages debtors not to be full and frank with their supervisors during the IVA. It means that arrangement assets undiscovered during the course of the IVA, but discovered post-completion (PPI mis-selling proceeds being a classic example), cannot be collected by the supervisor post-completion, even if they are arrangement assets. In an ‘all assets’ case, where the debtor has agreed in the IVA to make all his assets available for the benefit of the creditors, save excluded ones, how can a supervisor ever be satisfied that all has been realised? Arguably, without a specific agreement as to post-completion recovery of arrangement assets with the debtor, which the debtor may not necessarily agree to, the supervisor should never close such a case.

That is not what everybody understood by Gallagher. Everybody has been working on the basis that unless the terms of the IVA provided for termination of the trusts on the end of the IVA (for whatever reason) the trust continued. Therefore, an overlooked, unknown or undisclosed arrangement asset, or known but uncollected, could be collected by the supervisor for the benefit of the creditors without anything further. On the Green v Wright analysis, that is wrong where a certificate of completion has been issued. The ‘Guidance Note on Payment Protection Insurance Mis-selling Claims’, set out at D17, may well have to be revised.

Which brings me back to ‘VAT and Voluntary Arrangements: Guidance to the Practical Implications of the Paymex Decision’. As with the ‘Guidance Note on Payment Protection Insurance Mis-selling Claims’, it may well have to be revised. Since late 2011/early 2012, former supervisors and their firms, in reliance on the Guidance and the general understanding of Gallagher, have been relying on the continuing trusts to pursue claims against HMRC for the recovery of mistakenly paid VAT, with such payments being recovered for the benefit of creditors. They have closed cases, taking the view that it was inappropriate to keep cases open because of an accounting technicality when the debtor has otherwise complied with his or her obligations. On the Green v Wright analysis, that is wrong where a certificate of completion has been issued: in the absence of anything else, the supervisor may not have any power to collect the mistaken payment, because there are no continuing trusts after the issue of the completion certificate. This gives rise to the horrifying possibility of HMRC bringing claims against former supervisors and their firms for unravelling the consequences of having mistakenly paid out to them on their claims for mistakenly paid VAT. Or, worse, simply taking this into account in adversely assessing VAT returns from firms, and leaving it up to the firms to challenge the decision by appealing against the HMRC decision.

There is some hope. The Court of Appeal has granted the supervisor permission to appeal in Green v Wright, and the appeal is scheduled to be heard before the end of 2015. In the meantime, careful decisions have to be made as to when, and on what basis, completion certificates are granted.

Elsewhere, in 8[8] and 12[4A] there is consideration of the factually complex decision in Oakrock Limited v (1) Travelodge Hotels Limited (2) Wakemans Limited (3) Anglo-Holt Construction Limited and Others [2015] EWHC 30 (TCC), [2015] BPIR 360, which deals with the differentiation between claims that are compromised by the terms of the voluntary arrangement (which plainly are compromised by the approval), and claims that arise by virtue of the fact of the voluntary arrangement being approved (which are not necessarily compromised by the approval).

In 5[32], the decision of Robert Englehart QC (sitting as a deputy judge of the High Court) in Re Henry [2014] EWHC 4209 (Ch), [2015] BPIR 313 is noted, where the heavily criticised decision in Raithahta v Williamson [2012] EWHC 909 (Ch), [2012] 1 WLR 3559 was not followed, despite the facts being substantially similar. On the surface, the powers of a trustee in bankruptcy to require a debtor to elect to take undrawn pension entitlement so as to fund an income payments order may not seem relevant. But, the extent to which that pension entitlement may or may not be available to a trustee in bankruptcy has a marked effect on which assets the debtor should decide to offer to make available as arrangement assets, and also on the creditor’s tactical decision as to whether to approve the proposal, or take its chances on a better recovery in bankruptcy. Hopefully clarity will be provided by the Court of Appeal, which is due to hear the trustee’s appeal in January 2016.

Recent HMRC guidance on the taxation on the proceeds of mis-sold interest rate hedging products is noted at 21[4].

Finally, fast-track IVAs were abolished with effect from 26 May 2015. I doubt they will be missed, and are likely to be seen as an interesting experiment that never took off.

The law is stated as at 29 May 2015.

Paul French
May 2015
2017 Print Subscription Information
Looseleaf + CD-ROM*
£545.00 main work inc mainland UK p&p (there is an additional cost for non-UK mainland p&p)
4 updates per year approx £201.00 each, invoiced upon publication. You will continue to receive updates until you countermand this.

*This CD-ROM is designed to run on Windows based systems. To check your system compatibility please contact our helpdesk on 0117 917 5396.

Update 43 May 2017

The Insolvency (England and Wales) Rules 2016 have now come into force and this update reflects the changes brought about by the new Rules, changing the numbering as regards IVA provisions and more general ones. As a result the whole of Part A has been released. For the time being, the references to the Rules also include a reference to the old Rules, but over a period of time, these old references will disappear.

The update also considers the following cases:
Green v Wright [2017] EWCA Civ 111. This case emphasises the nature of the contractual terms agreed between the debtor and the creditors on the approval of the IVA, with the emphasis on the contouring obligation to comply with them. Notably, the Court of Appeal expressed the view that the Scottish decisions in Donnelly v Royal Bank of Scotland [2016] SC GLA 13 (the appeal in which was handed down after the hearing in Green v Wright) and Dooneen Ltd v Mond [2016] CSOH 23. The Scottish line of cases is that trust deeds come to an end on completion, different from the prevailing view emphasised in Green v Wright (although obviously the precise terms remain paramount). These decisions are noted in particular at A5[11B] and A17[80]. The appeal in Donnelly, on the application of set-off, is also specifically noted at A5[81A].
CFL Finance Ltd v (1) Rubin (2) Buchler (3) Gertner [2017] EWHC 111 (Ch), which determined that there had been no unfair prejudice in the approval of the IVA because the prejudice arose from the fact of the IVA, not its terms, but there had been a material irregularity, in that, in apparent breach of the principles of good faith, a creditor had been permitted to vote in respect of a dent that had to all intents and purposes been compromised, such that it had no or little value, is noted at A13[10] and A13[78].
Re Henry (a Bankrupt); Horton (as Trustee in Bankruptcy of Michael Gerard Henry) v Henry [2016] EWCA Civ 989, [2017] 1 WLR 391, [2016] BPIR 1426 is noted at A5[32]. While a bankruptcy case on the ability (or not) of a trustee in bankruptcy to require a debtor to crystallise his or her pension right so as to be able to fund an income payments order may not seem relevant, it is of immense practical importance. The fact that such assets are free from the reach of a trustee in bankruptcy makes an IVA rather more attractive if a debtor is offering a portion of such pension rights as arrangement assets.

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