eversheds

[ivamole]

Melanie, the professional bodies can only regulate if people complain. The fact that on their visits to IPs the professional bodies may check the procedures followed in a sample of IVA cases is not sufficient to claim that there is proactive regulation.

Debtors tend to be uninformed. That is why they need to take professional advice but - because they are uninformed - they cannot know if they have been badly advised or not. If you don't know, you can't complain.

Traditional insolvency practitioners like yourself might well be justified in feeling that you are regulated but the IPs who are acting for the large IVA factories are clearly not properly regulated - even on a meaningful sampling basis.

Many of the postings on this site seem to indicate that procedures for the proper conduct of creditors meetings that are essential to set up a statutory (rather than an informal) IVA are not being followed.

Debtors are paying for the protection of a statutory IVA that can only be set up by an IP. If they get something else - because the correct procedures have not been followed - then they are getting an informal arrangement, not a statutory IVA.

They are therefore paying professional fees for something that would not stand up if it was ever challenged in court.

Melanie,instead of getting upset and rushing to the defence of all IPs, wouldn't it have been easier to answer the question about the need for debtors to attend (or be available) for creditors meetings ?

By the way, if you also look at the proportions of complaints received by the professional bodies you will find that - except in cases of proven fraud or theft - very few lead to anything more than a warning or a reprimand or a fairly insignificant fine.

The professional bodies themselves say that more serious complaints about current cases - including complaints about fees - have to be dealt with through the courts. The professional bodies simply do not deal with the complaints that most matter to debtors.

How many debtors can afford either the costs or the risks of going to court ? If the cost or risk of complaining is too high then there is no effective regulation. That is why I believe we need a 'one stop' ombudsman for the benefit of everyone - including the good conscientious IPs out there. At least the experts at The Centre for Insolvency Law and Policy at Kingston University seem to agree with me on that point.

[MelanieGiles]

I am not rushing to the defence of all IP's - merely making my point as an IP who has been in practice for a number of years, having received two very detailed regulatory visits from the Insolvency Practitioners Association and the Institute of Chartered Accountants in England and Wales. It is hard to obtain an insolvency licence these days, as I am very proud of the fact that I hold one!

I do not on the whole find the clients who come to me to be uninformed at all. Most of them have researched bankruptcy, IVAs and DMP's quite well before they arrive, and certainly by the end of our working relationship they are completely well informed.

I am afraid that I do not agree with the majority of your general comments about my profession. Whilst this forum is extremely helpful to a number of our members, with approximately 500 members so far it is not entirely representative of the IVA marketplace as a whole, where the majority of debtors are happy with their arrangements, the service provided by their practitioners and the fact that they are no longer burdened by debt. I agree that the IVA factories ought to be looked at more closer by the regulators, and the ICAEW have already published confirmation that they will be subjected to more frequent monitoring visits, which will focus on the advice and options initially given and best practice, rather than whethere annual reports are filed on time.

Yes, the regulators will only be made aware of issues when they are informed of issues. That is down to individual clients to deal with if they feel they have been misled or misinformed. Standard letters of engagement should always quote the route for complaints to be followed - both internally and externally if necessary.

If an independent ombudsman will help to give debtors a route to seek further guidance, and stop my profession from being put in the firing line continually by the media, creditors and disgruntled clients, that I will support that idea wholeheartedly. A merging of the eight regulatory bodies would also go some way to provide consistency in approach.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[freelili]

IVA mole

I would not want to upset anyone here but
I think your input on this site is really needed. If everythin was all hunky dori with all IP's, sites like this would not be needed. S***t happens, Kerri, coco, DD and skippy all happened. The TV advert that prompted me into looking at IVA mentioned 'government legislation' I really believed that I was talking to someone appointed and vetted by the governmant and I believed all I heard. Furthermore, 'debtors' like myself are desperate for an answer and are unlikey to question what they are hearing. The associated 'legal speak' is a different language to blind, stressed out eyes. I think this is what gets peoples knickers twisted. I realise that there are a great many professionals committed to their clients best interests but in any profession there are people who will stand outside the box and its difficult for the 'layman' to 'take them on' even if they suspect malpractise. A typical example of this is Shipman.



LILY

[ivamole]

Thanks Lily.

I would still like to know if I was right or wrong about creditors meetings.

[MelanieGiles]

Debtors are not required to attend creditors meetings these days, but must make themselves available to be spoken to on the telephone on the day of the meeting.

All creditor modifications must be put to the debtor and he/she must formally agree them with the IP. An IP cannot and must not accept modifications to a debtor's IVA proposal without their prior agreement, and it would be a dangerous practice to do so, as this would null and void the voluntary arrangement.

The original poster does not refer to any modifications being put forward by Eversheds, just that they voted.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[ivamole]

True - but he also said that he didn't know anything about the outcome of the meeting until about 2 hours afterwards.

I may be wrong but I read this as meaning that he was not available on the phone (if not in attendance)or consulted during the actual times given for the meeting.

Maybe it would help if allan f. could clarify this.

[Skippy]

I was told the outcome a couple of hours after my creditor's meeting. I was available on the phone all morning, but as it was fairly straightforward (most of the modifications were in the original proposal!) there was no need to speak to me.

Onwards and upwards!!!
View my blog at: http://skippy13.blogs.iva.co.uk/

[scaredkez]

synergi never phoned me for quite a while after the meeting and this was only becuase i telephoned them to see what had happened, they very briefly told me of two modifications and said it would mean an increase of £20 per month, they telephoned me later and said it actually equated to £118 per month, surely they would have seen that straight away as it was 2 policies that they wanted cancelling, however they said they would e-mail the modifications instead of going over them by phone, i telephoned 2 days later to ask were they were, i received the following day and on my charges was charged over £15 for the privellege and for the 2 calls that i had made to them in regards to this.
i was asked to be at the other end of the phone on the day they did also say i could attend, it would have been cheaper if i had as the eventual telphone call cost £65 to say it had been adjourned initially.
in my case i was very mis informed as was only given 2 options iva or BR obvioulsy the latter frightened me to death so it was inevitable after seeking professional advice that i would go this way, suppose i am to blame really for not insisting on more information on something i really didn't understand at the time, as lily said when you are desperate you believe all you hear,
i also agree we are only a small minority here in the vast world of iva's but would love to know what percentage of iva's actually run their course and are succesful as a percentage to those that don't
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

[ivamole]

kerri, one of the problems is that no one seems to have any statistics on failure rates once IVAs are in place.

We know that at least 10% of the IVA proposals put forward by the IVA factories fail and I think a further 10% of approved IVAs fail - but I don't think there are any official figures on failure rates.

When an IVA fails the supervisor is normally required to petition for the debtor's bankruptcy. This is often written into the terms of the IVA. For some reason this doesn't always happen and there seem to be a number of case where supervisor's also fail to file a final report if the arrangement fails. The IVAs just seem to fade away.

If there were proper figures, I think the 'failure rate' should show how many IVA proposals are voted down, how many debtors are made bankrupt as a result and it would also be very interesting to know how many of these 'failed IVAs' are later turned into successful Fast Track Voluntary Arrangement (FTVA)by the Official Receiver after the debtor has been made bankrupt.

Even if you take into account the bankruptcy costs, the fees charged by the Official Receiver for acting as nominee and supervisor in a FTVA are lower than the fees for an IVA arranged by the commercial providers so this should help the success rate.

Figures on the conversion rates from failed IVAs to FTVAs would be particularly.

I even noticed the other day that the Insolvency Service are now trying to track down the outcome in IVAs dating back 15 years or so that are still on their books. Some sense of urgency !

The monitoring of the system is so laid back - it's practically horizontal.

[scaredkez]

thanks for that ivamole it is very interesting, it makes you think a lot, what does happen to these poor people that have failed the iva and where are they now, its a shame that there are no statistics, why are the IPs not petitioning then if that is what they are supposed to through the iva is this coming down to cost again?
as you say about the fees for the ip in BR FTVa why can they be so different, sorry for asking so many questions i really am interested as to why this is allowed, i mean i know in BR the OR is more lenient with your income and expenditure why can't there be a guideline for whats allowed i know IVA's are individual, but there should be an acceptable maximum and minimum allowance, instead of the IPS that we have discussed being able to jig these figures to meet the creditors demands, your input is valuable and i have learnt a lot, a lot of us here are grieved by the IVA and i am not out to upset anyone on this, but we are not hearing a high feedback off those who have managed and are happy with their IVA, i know its not supposed to be a bed of roses and we all put ourselves were we are, but it would be nice to have more positives than negatives once the process has been accepted and they are further down the line than the majority of us and our new posters.
sorry for rambling but i read your posts with interest
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

[ivamole]

kerri, I don't think it's a question of the Official Receiver (OR) being more lenient. They are, in fact, quite rigorous but I suspect that, because they also 'investigate' debtors circumstances quite thoroughly, the OR is probably seen by creditors as a more credible Nominee when he puts forward proposals for an FTVA.

I think the traditional IPs who provide a direct personal service and may, shockingly, have even met their debtors probably have the same credibility as the OR and I think that is probably also reflected in their success rate.

The highest level of failures seems to be with the IVA factories but I also saw a report this week that the number of IVAs taken up has dropped quite significantly since December.

It will be interesting to see if this has been offset by the numbers of people 'wising up' and opting for bankruptcy instead if that was really the best course for them to take all long. The debt charities have been very active on this front recently.

As for IPs not petitioning for bankruptcy, I guess this might have something to do with costs but most IVAs have a condition which says the supervisor should retain sufficient funds to file a petition - so that should not be a consideration.

Perhaps the more interesting question is - who should petition for bankruptcy if the IVA proposal is voted down ? Logically, creditors who vote against and defeat an IVA should then take the next step and file a petition for bankruptcy. The question is: Do they ?

And, if not, why not ?

[MelanieGiles]

Just for your information

1 The DTI keep very detailed statistics on failed IVAs, as do the regulators, as each year IPs are required to confirm just how many cases have failed as part of their annual returns.

2 These days the majority of creditors modify out the requirement for the superivisor to petition for bankruptcy from IVA proposals, ie they expressly state that the Supervisor should not petition for the debtor's bankruptcy in the event of IVA failure.

3 Fast track IVA's are very infrequent. The OR's offices around the country are just not doing many at all.

4 You will generally find far more investigatory work done by an IVA nominee that the Official Reciever. These days, most of the OR's interviews (especially for consumer debtors) are conducted over the telephone, and Income Payments Orders and Agreements are rare.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[ivamole]

The problem with the DTI is that they receive figures but do not always collate them into meaningful or useful form for publication. They then have to commission research to find out what their own records say.

For example, they had to commission research into the 65,000 or so IVAs started between 1987 and 2002 to find out that 37% had been completed, 23% had failed and 40% were ongoing. Of those that were ongoing some would also fail.

The Insolvency Practices Council (IPC) recommended as long ago as 2001 that professional bodies should investigate IPs with high incidences of failure but the response on this was patchy. They also suggested that "a more systematic approach" on the collection of statistical information was needed.

The IPC are still saying that they have (quote) : ".... twice recommended to the insolvency profession that it should obtain statistics on the performance of Individual Voluntary Arrangements (IVAs) for policy and regulatory reasons. Some progress is being made. "

I would suggest that if returns are being completed then no one is doing anything with them to assist in both policy and regulation and, from my own research into the disciplinary reports of the professional bodies, I have yet to see any record of a IP being disciplined for high incidences of failures in IVAs - despite the fact that the incidences must provide a good indicator of persistent professional incompetence if not professional negligence.

[neverending]

ivamole
Your input is welcome and you are highly knowledgable.
I have always been interested in the "creditors meeting" and wether or not it actually takes place.My commen sense tells me that it seldom actually takes place and have had contrasing comments from Ips on this site.Thomas Charles[yes I know that they are not an actual IP] state 10% of meetings actually take place as do Accuma,Melanie thinks it is 2 TO 3%.I still think that it is actually less than this and probably only happens in high value/complex cases[can you imagine a representative from each creditor meeting around a table ??].in general it is all done by proxy voting so maybe in the future the term "creditors meeting" needs changing.
I also do feel for Melanie who is the only IP that regularly posts on this site,trying to defend the whole industry....................and you do represent them extremely well !!!
Keeps it an interesting forum

[MelanieGiles]

Creditors meetings, with votes by proxy rather than attendance, have existed in the insolvency world probably since long before anyone ever kept statistics - not just in IVA meetings, but those for bankruptcy, liquidations, administrations and receiverships.

It is perfectly acceptable to hold a creditors meeting in such manner, and I am absolutely sure that if we tried to persuade debtors to attend their meetings we would be largely unsuccessful - it is difficult enough to persuade some people of the merits of meeting their IP in the first place!

My statistics of between 2-3% were for creditors attending meetings, not actual meetings taking place! Meetings do happen, and a lot of my staff's time these days is spent in persuading creditors to change their rejecting or modifying votes.

And what would be a more meaningful figure on IVA failures would be to categorise the reasons why rather than beating up insolvency practitioners for high failure statistics. Fine - if IPs are regularly putting people into IVAs without explaining other options, knowing that the case is likely to fail - then they should have their licences looked at very carefully. But in my experience, the main cause for IVA failures can be listed below:-

1 Change of circumstances ie pregnancy, divorce, loss of partner
2 Loss of employment
3 Apathy of debtor - when IVA merely becomes a millstone and they eventually get resentful of having to make payments.
4 Business failure

If IP's had crystal balls we could reduce the IVA failure rates. Sadly we do not have that luxury. What we have to do is to assess at the beginning of the case whether we feel the debtor demonstrates an appropriate commitment to the arrangement, whether they can comfortably afford the payments, whether creditors are likely to accept the offer, and then whether we feel that the arrangement has a good chance of running its course.

If 80% of cases (according to IVAmole's statistics) run to their conclusion, that is not a bad strike rate in my book, given that they generally run for five years of a human life - where naturally there will be occurances happening which can be lifechanging but cannot be forethought.

If you think that changing the idea of a creditors meeting is sensible, think again. In my opinion one of the real advantages of the IVA procedure, as against DMPs, is that the creditors have to make their minds up on a set day at a set time. If they fail to do so, they are left out of the vote and bound by those who can be bothered.

If ever you have tried to get agreement without that statutory timeline, and I have on many occasions when brokering informal offers of settlement, you will find that you go round a merry-go-round of differing creditor opinions made at differing times - eventually getting nowhere.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk