Presentation on theme: "Presented by Mr. Michael Cheung. What is an IVA? A voluntary agreement sanctioned by the court Entered into between debtor and his creditors Debtor’s."— Presentation transcript:
What is an IVA? A voluntary agreement sanctioned by the court Entered into between debtor and his creditors Debtor’s liabilities settled by composition or scheme or combination of both
Procedure 1 Approach a nominee and prepare proposal Undischarged bankrupt / Non- bankrupt Proposal must include – reasons for going IVA – assets and liabilities – duration of arrangement – how creditors are to be paid
Procedure 2 Interim Order 14 days moratorium Section 20C Bankruptcy Ordinance intention to make proposal undischarged bankrupt/able to present his own petition no application in previous 12 months
Procedure 3 Nominee’s Report Viable proposals Statement of Affairs Recommendation as to holding of creditors’ meeting
Procedure 4 Creditors’ Meeting Between 14 to 28 days Majority in excess of 75% in value
Procedure 5 Implementation of the IVA No challenge made to court within 28 days Interim order discharged Binding on all creditors having notice of and entitled to vote at meeting Details of the IVA be entered into a register for public inspection
Advising a creditor What is in the proposal? How reliable is the information disclosed? Is there anything hidden by the debtor?
Advantages Less traumatic Cheaper and more beneficial to creditors No statutory disabilities Professional help and advice Interim order - breathing space Binds all creditors
Disadvantages Depends very much on debtor’s desire to ‘come clean’ with creditors Nominee has no right to take action on preferences or undervalue transactions
I. Formulation of the proposal è Initial Contact with the debtor è Principal tasks of the Nominee prior to the approval of the debtor’s proposal è Nature of proposal è Statement of Affairs
II. Formulation of proposal è Attitude of the creditors è Possible claims by a trustee in bankruptcy è Duration of the arrangement è Continuation of the debtor’s business
III. Nominee ’ s report è Professional judgement è A critical eye on the debtor’s statement of assets and liabilities è The proposal meets the criteria set out in the legislation
IV. Creditors ’ meeting è Convening creditors’ meeting è Chairman of the creditors’ meeting è Voting rights è Majorities required at meetings
V. Creditors ’ meeting è Adjournment of creditors’ meeting è Report of result of creditors’ meeting
Bankruptcy Rule 122ZD An offence if makes any false representation or commits any other fraud for the purpose of obtaining the approval of a voluntary arrangement. Liable to a fine at level 2 and to imprisonment for 6 months.
Civil Service Regulation No. 458 An officer who becomes insolvent or bankrupt, even though no proceedings have been taken against him is required at the earliest possible moment to submit a complete statement of the facts of his case to his Department, for transmission to the Civil Service Bureau.