Interim order: for an Individual Voluntary Arrangement IVA

Unless and until the IVA is approved, the client is vulnerable to enforcement action by creditors. To avoid this, once the insolvency practitioner has become the nominee, the next step is to apply to the court for an ‘interim order’.” The effect of an interim order is that: 

• No creditor can try and make the client bankrupt.
• No landlord may exercise any right of forfeiture by peaceable re-entry.
• No court proceedings or other enforcement action (including the levy of distress) may be commenced or continued against the client or her/his property without the permission of the court.
  The application is made to the county court for the insolvency district in which the client resides (or the court which has conduct of the bankruptcy where the client is an undischarged bankrupt). It must be accompanied by an affidavit (a sworn statement) and a copy of the endorsed notice of the proposal. A court fee is payable.
  The court sets a hearing date to consider the matter and gives two days’ notice. The court can freeze (or ‘stay’) any other court proceedings or enforcement action against the client (including forfeiture by peaceable re-entry) pending consideration of the application, and usually does so. If the client is an undischarged bankrupt, notice must be given to the official receiver and any trustee.

The court can make an interim order provided that:

• It is satisfied that the proposal is ‘serious’ and viable — i.e., that it has not been made just to delay the making of a bankruptcy order and with no benefit to creditors.
• The insolvency practitioner is prepared to act as nominee.
• There has been no application for an interim order in the previous 12 months.
• The client is either an undischarged bankrupt or could petition for her/his own bankruptcy.

An interim order initially lasts for only 14 days but is usually extended to allow sufficient time for the creditors' meeting to take place and for the nominee to report back to the court. An IVA cannot be made unless the creditors support the arrangements. Therefore, the next step is for the court to consider whether it will be worthwhile holding a meeting of creditors to consider the terms of the client's proposals. The nominee must submit a report to the court indicating whether, in her/his opinion:

• The proposal has a reasonable chance of being approved and implemented.
• A creditors' meeting should be called; and the proposed date, time and place of the meeting.

In most cases this is presented at the same time as the application for the interim order. Provided the court is satisfied that the proposals are worthy of being put to creditors, the court will usually endorse the recommendation and extend the interim order for seven weeks after the proposed date of the meeting (where the matters are dealt with together the order is known as a ‘concertina order’).
If the court rejects the nominee’s recommendations, the interim order is discharged and any proceedings or enforcement action can continue.