(1) Individual Voluntary Arrangement (IVA)

It is the repayment proposal proposed from a Debtor to Creditors which is accepted by majority of the creditors. The applicant who has no ability to repay all liability or who has been declared bankruptcy can apply for Individual Voluntary Arrangement (IVA).

(2) The Comparison between IVA and Bankruptcy


(1) Daily Life
Except the applicant the new loan, the applicant does not have any restrictions. He needs to notify the employer about his individually voluntary arrangements.
The applicant cannot apply for new loan, or take taxi and aircraft at his expense. He cannot travel abroad and need to declare to Official Receiver for every departure from and return to Hong Kong. He needs to notify his insolvency situation to his employer. Bankruptcy will effect his personal life insurance and arrangements.

(2) Effect on Career
There is no difference between others. The applicant can still perform as company director or professionals.
The applicant cannot act as company director. He may lose the existing work, such as civil servant or professionals.

(3) Individual Wealth
The applicant can get the creditor sanction for not to freeze his assets in order to protect his pensions and to avoid to sell out his resident property.
All assets must be delivered to Official Receiver for repayment to creditors.

(4) Asset Transform
No-one has the authority to investigate and the previous asset transferred.
The Official Receiver will conduct investigation and recovery of assets transferred prior to bankruptcy. Retroactive period will be divided into 6 months, 2 years and 5 years, according to the nature or objects of the transaction.

(2) the Comparison between IVA and Bankruptcy (cont’d)


(5) Duration
Length of repayment is based on applicant’s ability to repay the principal, usually more than 4 years.
Time for the first time bankruptcy lasts for 4 years. 5 years is for bankruptcy of the second time. The period can be extended up to 8 years if objection with reasonable provide were received.

(6) Individual Reputation
Less impact. Only creditors know.
Greater impact
The applicant need voluntary declares his bankruptcy and pensions.

(7) Disbursement Costs
(a) Total costs for solicitor and Nominee are $25,000 (in which $20,000 can be paid by future installments).

(b)Court cost is charged at 1.5% for the liability up to $100,000 and additional 0.75% for remaining liabilities.

(c) Advertisement and other charges are approximately $5,000.

(d) Monthly management fee for nominee is approximately $500 to $800 per month.

(a) Legal fee for voluntary bankruptcy is approximately $8,000.

(b) Official Receiver Office Court fees and cost are approximately $14,150.

(c) Advertisement and other charges are approximately $5,000.

(d) All statutory charges and management fee are charged in accordance with issued by the Official Receiver Office guidelines.


(3) Application Procedures:

1. Preparation of Balance Sheet and Income & Experience Account
2. Appointment of solicitors and Nominees
3. Debtor prepares a proposal (usually solicitor and nominee will assist the debtor’s application)
4. Apply to the court for an Interim Order
5. Nominee submits report for debtor’s proposal to the Court
6. Meeting of creditors is convened after obtaining an Interim Order from the Court
7. If majority creditors accept the proposal, it becomes a binding agreement.
8. Nominee is responsible to implement and monitor the passed agreement