Section 2 of 16

Setting up an IVA

How an IVA is proposed to creditors, the role of the Insolvency Practitioner as Nominee, the creditors’ vote, and what approval means.

The IVA proposal document

An IVA begins with a formal document called the IVA Proposal. Drafted by your Insolvency Practitioner, it sets out all the terms — what you will pay, for how long, how your assets will be treated, and what will happen in scenarios such as a windfall or change in income. You should have signed it before it was sent to creditors.

Keep your proposal document safe

Your IVA proposal is the definitive record of your arrangement. If you have lost your copy, ask your IP to provide one — they are required to retain it.

The IP as Nominee

Before the IVA is approved, your IP acts as your Nominee. In this role they prepare the proposal, assess your financial position, issue a Nominee's Report to creditors, send documents to all known creditors, and manage the decision procedure. Once approved, the IP's role changes from Nominee to Supervisor.

The creditors' decision procedure

Creditors do not automatically agree to an IVA. Under the Insolvency Rules 2016, they vote on whether to accept or reject the proposal. In most cases creditors now vote by correspondence (post or electronically). They are typically given 14 days from the date the proposal is sent to submit their votes.

The 75% voting threshold

Each creditor's vote is weighted by the value of the debt they are owed. For approval, creditors representing at least 75% by value of those who actually vote must vote in favour. Creditors who do not respond are excluded from the calculation.

Creditors may approve the proposal as drafted, approve subject to modifications, or reject. If modifications are requested and the required majority agrees, the IVA is approved on those modified terms. You have the right to accept or reject proposed modifications before they are finalised.

Connected creditors

If any creditor is connected to you — for example, a family member you owe money to — their votes are counted separately. They cannot be decisive in approving the arrangement, preventing manipulation of the outcome.

When the IVA is approved

If the required majority vote in favour, the IVA is approved and legally binding on all unsecured creditors who were notified — including those who voted against or did not vote. The IP files a report with the court within four business days. The IVA is registered on the Individual Insolvency Register and interest and charges are frozen from this date.

The interim order

In some cases, an interim order is obtained from the court before the creditors' vote. This provides temporary protection from creditor action whilst the proposal is being considered. Many modern IVAs are set up without an interim order where the IP is confident of quick approval. Whether one was obtained in your case will be stated in your proposal documents.