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23 March 2020COVID-19
The Insolvency Service have asked that insolvency practitioners show forbearance with clients that are not able to meet their financial commitments in the current climate.
This should be welcome news for those that are in a voluntary arrangement (individual voluntary arrangement (IVA) or company voluntary arrangement (cva) where they are struggling to meet monthly contribution requirements due to the impacts of measures taken to combat Covid 19. Whilst most practitioners help clients write proposals that give the supervisor discretion to deal with genuine and temporary issues which lead to an inability to meet monthly contribution requirements sometimes creditors will have modified these proposals to withdraw this discretion. If there is no discretion, absent emergency legislation (which may be forthcoming) then the supervisor will need to work with debtors and creditors to agree a variation to the proposals.
For individuals and businesses really struggling in the current climate a voluntary arrangement might be an option worth considering. This procedure works very well where there is a ‘blip’ and the underlying business / trade is strong and the debtor needs some breathing space to get things back on a firm footing. In the current climate creditors such as landlords, HMRC and suppliers should be more understanding and may well agree to temporary measures set out in a CVA / IVA that in normal circumstances would be much more difficult to achieve. One particular benefit of a CVA is that the directors remain in control and the business will continue, albeit, with some changes to reflect the current trading conditions.
Please do call Sandra Mundy if you are thinking about this as an option as she would be very happy to talk through the procedure, the pro and the cons and the suitability to your circumstances. This will be a free of charge no obligation initial discussion.