1. Presented by Mr. Michael Cheung

2. What is an IVA?  A voluntary agreement sanctioned by the court  Entered into between debtor and his creditors  Debtor’s liabilities settled by composition or scheme or combination of both

3. Procedure 1 Approach a nominee and prepare proposal  Undischarged bankrupt / Non- bankrupt  Proposal must include – reasons for going IVA – assets and liabilities – duration of arrangement – how creditors are to be paid

4. Procedure 2 Interim Order  14 days moratorium  Section 20C Bankruptcy Ordinance  intention to make proposal  undischarged bankrupt/able to present his own petition  no application in previous 12 months

5. Procedure 3 Nominee’s Report  Viable proposals  Statement of Affairs  Recommendation as to holding of creditors’ meeting

6. Procedure 4 Creditors’ Meeting  Between 14 to 28 days  Majority in excess of 75% in value

7. Procedure 5 Implementation of the IVA  No challenge made to court within 28 days  Interim order discharged  Binding on all creditors having notice of and entitled to vote at meeting  Details of the IVA be entered into a register for public inspection

8. Advising a creditor  What is in the proposal?  How reliable is the information disclosed?  Is there anything hidden by the debtor?

9. Advantages  Less traumatic  Cheaper and more beneficial to creditors  No statutory disabilities  Professional help and advice  Interim order - breathing space  Binds all creditors

10. Disadvantages  Depends very much on debtor’s desire to ‘come clean’ with creditors  Nominee has no right to take action on preferences or undervalue transactions

11. I. Formulation of the proposal è Initial Contact with the debtor è Principal tasks of the Nominee prior to the approval of the debtor’s proposal è Nature of proposal è Statement of Affairs

12. II. Formulation of proposal è Attitude of the creditors è Possible claims by a trustee in bankruptcy è Duration of the arrangement è Continuation of the debtor’s business

13. III. Nominee ’ s report è Professional judgement è A critical eye on the debtor’s statement of assets and liabilities è The proposal meets the criteria set out in the legislation

14. IV. Creditors ’ meeting è Convening creditors’ meeting è Chairman of the creditors’ meeting è Voting rights è Majorities required at meetings

15. V. Creditors ’ meeting è Adjournment of creditors’ meeting è Report of result of creditors’ meeting

16. Bankruptcy Rule 122ZD  An offence if makes any false representation or commits any other fraud for the purpose of obtaining the approval of a voluntary arrangement.  Liable to a fine at level 2 and to imprisonment for 6 months.

17. Civil Service Regulation No. 458  An officer who becomes insolvent or bankrupt, even though no proceedings have been taken against him is required at the earliest possible moment to submit a complete statement of the facts of his case to his Department, for transmission to the Civil Service Bureau.