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PVA & Individual IVAs

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PVA & Individual IVAs

The two procedures can be used simultaneously where there are a number of partners whose financial circumstance differ i.e. some do not have personal debts, some do. Also the partnership itself is under pressure from creditors.

All the partners are vulnerable to action from partnership creditors and the partners with personal debts need protection from personal creditors.

Example

A law practice with 10 partners has solvency problems and needs to consider a PVA in relation to partnership debts. However, there are four partners who in addition to the partnership debts, have personal debts which exceeds the value of their personal assets. These partners therefore need to put forward a deal to their personal creditors which will also relieve pressure on the partnership as these partners' drawings requirements were unsustainable.

The PVA allows the partnership to repay as much of its debt over a defined period of time. The partnership's assets and the partner's personal assets are not however, protected from action by personal creditors of the four partners. Therefore IVA's for these four partners, if approved, would protect both personal and partnership assets.