The much-anticipated judgement in the case of Green v Wright has now been made public. The ruling made by the Court of Appeal brings with it much welcomed clarity in a highly contentious matter.
The judge has ruled that the release of a debtor from an IVA (Individual Voluntary Agreement) is not the same as the discharge of the debt, and after the release any property subject to the IVA is held on trust. The effect of the release from an IVA is the same as a discharge from bankruptcy.
This means that supervisors could claim funds or property from individuals after the release from an IVA, if that property formed part of the IVA.
It remains to be seen what the direct impact of this judgement will be on the insolvency industry and how it will be incorporated into the day-to-day management of IVAs.
The question put before the court was simply this - when an IVA comes to a close, is that really the end of the story, or could unknown or pre-existing assets still come into play?
Green v Wright is believed to be the first of its kind and involved an individual whose IVA had come to an end in January 2013. As part of the closing procedure, documents including a ‘Certificate of Completion’ were issued and confirmed that the individual had no further obligation to his creditors.
Some months later, the former supervisor of the IVA received payments from the individual’s lenders in respect of outstanding PPI claims.
Previously, it was standard practice for the practitioner to keep any payments, in spite of the fact that they no longer had any official capacity under which to handle those funds, once the IVA had been completed.
The matter was initially heard by Burnley County Court with the ruling later upheld on appeal by the High Court, finding in favour of the individual and ordering that the funds from the PPI claim be repaid to by the supervisor to the individual. The Court of Appeal’s decision now reverses this ruling.
If you require further more information on this contact Louise Hebborn, commercial partner at Stephensons.
The full judgement can be found here.