Interim Order

If you are experiencing significant and immediate pressure from your creditors, such as threats of legal action or bankruptcy proceedings, you may well benefit from the protection of an Interim Order.

What are Interim Orders?

Interim Orders in Individual Voluntary Arrangements are a tool to stop creditors taking action against you whilst your IVA proposal is prepared.

It’s original purpose was to help self employed people keep their businesses going when trade creditors became aware they might be tied into a long term arrangement that would see them only get a part of what they are owed.

These days it is still mainly used for that purpose and rarely used for simple consumer IVAs.

However, if you are an ordinary employed person and are being harassed by a creditor who threatens to stop your IVA, then it may be useful, but, as we said, these days most creditors understand that you are entering an IVA to do your best to repay what you owe and so Interim orders are rarely needed.

How to get an Interim Order?

An application for an Interim Order may be made where a debtor intends to make a Proposal for a composition with his creditors under Part VIII of the Insolvency Act 1986 and Part 5 of the Rules 1986, as amended by the Insolvency Act 2000  and the Enterprise Act 2002 and the Insolvency (Amendment) (No 2) Rules 2002 and  the Insolvency (Amendments) (No 3) Rules 2003 respectively.

In order for the application to be considered, the Proposal must provide for a Licensed Insolvency Practitioner to act as the Nominee in relation to the Voluntary Arrangement.

You, the debtor can only make the application if you are NOT an undischarged bankrupt. If you are bankrupt, the application can also be made by the trustee of your estate or by the Official Receiver.

What an Interim Order does

The purpose of the Order is to provide you, the debtor, with an initial moratorium period whilst a Voluntary Arrangement is put in place.

Where an application has been made, a landlord cannot exercise the right of forfeiture to the premises without the leave of the Court which may also forbid any distress to be levied  against (or sale of) the debtor’s property.

Furthermore, any Court in which proceedings are being brought can stay them, or allow them to continue “as it thinks fit”, once an application has been made.

Under the Insolvency Rules 1986, where the debtor is already bankrupt, two days business notice of an application for an Interim Order must be served on his trustee and the Official Receiver.

In the event that a bankruptcy petition has been presented against the debtor, two days notice of the application must be served on the petitioner.

How long does an Interim Order last?

An Interim Order is usually made for a period of 28 days.
This period allows the Insolvency Practitioner, as the Nominee, to report to the Court, on his recommendations over whether the debtor’s proposal should be submitted to the general body of his creditors or not.
It is usually, but not invariably, the first. Where the report recommends that the report is submitted to creditors, the Interim Order is extended to allow the meeting of creditors to be convened to consider the IVA proposal.
Where the Nominee does not recommend this, the Interim Order is allowed to lapse, and creditors are then able to continue or to commence legal processes against the debtor.

Interim Orders and IVAs

Since the Insolvency Act 2000 amendments came into force on 1 January 2003, simple consumer Individual Voluntary Arrangements can be processed without an application for an Interim Order to create a moratorium period.

As a consequence, most Individual Voluntary Arrangements which deal with consumer debts, do not require such an application.

Interim Orders are now generally only made where the debtor’s affairs are more complex, such as where he is a sole trader or in partnership with another.

We hope you have found our guide to Interim Orders useful. If you want some help with your debts, speak to us today on 0800 019 2095 or complete our contact form and we’ll call you back.

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Interim Order

Updated on 2016-09-30T15:26:56+01:00, by Kristian Stock.