What is an IVA completion certificate? Licensed Insolvency Practitioners, Chamberlain & Co explain the IVA process and the effect of an IVA completion certificate.

What is an individual voluntary arrangement (IVA)?

An individual voluntary arrangement (IVA) is a formal legal agreement composed under the Insolvency Act 1986. It will also be compliant with other governing legislation and best practice documents, such as The Insolvency (England & Wales) Rules 2016 and Statements of Insolvency Practice (SIPs).

An IVA forms a contract between an individual and their creditors, which records a settlement of their liabilities to their creditors. 

The majority of IVAs are based upon individuals making monthly contributions from their surplus income into an IVA fund. This fund is then paid to their creditors in settlement of their claims against the individual. These IVA’s normally run for a period of 5 years and are often referred to as ‘consumer IVAs’.

Whilst the majority of IVAs are consumer IVAs it is also possible for alternative proposals to be put to creditors. These may take the shape of a one-off payment from a third party or may be based upon the release of an individual's equitable interest in their property. This may be appropriate where an individual has significant assets and requires time to liquify their assets to make payments to their creditors. 

Bespoke IVA proposals are most used where an individual’s affairs are more complex – for example, if they have extensive investments or a property portfolio.

How do you get an individual voluntary arrangement (IVA)?

The nature and terms of the IVA will be discussed with the Insolvency Practitioner who will assist the individual in the formulation of their proposals to ensure it represents a fair offer to creditors. Equally, the Insolvency Practitioner will seek to ensure that the offer is realistic and achievable and has a genuine prospect of being implemented. The Insolvency Practitioner will then assist the individual in proposing the IVA to their creditors – at this stage acting as ‘nominee’.

If the IVA is approved, the nominee will become ‘supervisor’ of the IVA. The primary duty of the supervisor is to ensure that the terms of the IVA are adhered to.

The supervisor will become an intermediary between both parties and will liaise with the individual’s creditors regarding the agreement of their claims, and in due course, the payment of a dividend from the funds received into the IVA.

Equally, the supervisor will liaise with the individual to ensure that they meet their obligations under the IVA in the timescales prescribed. Where deviation from the terms of the IVA arises, or is required because of changing circumstances, the supervisor will work to ensure that a mutually agreeable compromise is achieved between all parties. 

What is an IVA completion certificate?

When an individual has met all their obligations under the IVA, the IVA will have successfully concluded. 

At this point the supervisor will prepare an IVA completion certificate which will be provided to the individual and their creditors. 

The completion certificate is the individual’s evidence that they have complied with all the terms of their arrangement and that it has been successfully concluded.

What is the effect of an IVA completion certificate?

The IVA completion certificate is an important document and should be retained by the individual. This is because:

• It will mitigate any future claims against them arising from creditors bound within the IVA, should they pursue the individual following the completion of the IVA. 
• It grants peace of mind to the individual that the IVA has been a success.
• It may assist the individual in obtaining future finance, such as a property mortgage, as it will confirm to the bank that the IVA has been discharged, although this will be dependent on the requirements of the lending bank.

Whilst the terms of each IVA will vary, it is important to note that often the completion certificate will not affect the duties and powers granted to the supervisor under the arrangement. Mainly this is to enable the supervisor to remain empowered to make final dividend payments should, for example, a creditor be slow to bank a dividend cheque.

This can also serve to ensure that any assets which were caught under the IVA trust remain within the trust. An example of such an asset is Payment Protection Insurance (PPI) claims. Whilst it is no longer possible to initiate PPI claims, for many years individuals discovered they were entitled to a PPI refund from a period in which they were subject to an IVA.

How such claims are dealt with should be clearly stated within the IVA proposal at its inception and should be discussed with the Insolvency Practitioner. The individual will be required to sign confirmation of their understanding of the terms of the IVA by the Insolvency Practitioner as part of their engagement process.

It is therefore important to ensure that any such claims are communicated clearly to the former supervisor, as the former supervisor will ensure that these funds are dealt with correctly in accordance with the terms of the IVA.  

About the author

Chamberlain & Co are Licensed Insolvency Practitioners and business recovery specialists committed to delivering high-quality service and value to clients in all industries.

See also

What are your options when an IVA fails?

What debts are included in an individual voluntary arrangements (IVA)?

Bankruptcy or an IVA - which is best?

Find out more

Insolvency Act 1986 (Legislation)

The Insolvency (England & Wales) Rules 2016 (Legislation)

Statements of Insolvency Practice (ICAEW)

Image: Getty Images

Publication date: 11 June 2021

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.