Northern Rock Vote Against IVA’s

There is little sympathy for the plight of Northern Rock from within the Debt Resolution industry as they have a policy of voting against IVA proposals.

To get an IVA approved, 75% of your creditors, by value of the debt must vote in favour of it. Therefore if more than 25% of your debts are with Northern Rock, you can’t even apply for an IVA as there appears little chance of it being approved. This has been the case since early 2006.

I believe this is clearly not fair on Northern Rock’s customers who find themselves in the unfortunate position of being over-stretched. Unlike all the other major UK lenders, Northern Rock are not prepared to offer their customers the chance to repay as much of their debts over five years as they can, in return for writing some of it off.

The only conclusion that can be drawn from this is that Northern Rock would rather see their clients bankrupted than allow them a fair settlement opportunity.

In July 2007 , Northern Rock’s chief executive Adam Applegarth stated:-

‘We have a problem with practitioners of IVAs… In nine of 10 cases, we are finding that all the customer needs to do is reorganise their finances.

Maybe Mr Applegarth should have been looking closer to home for need of financial reorganisation  - before the government had to bail is company out.

HSBC Demand 40% Dividend
Another lender currently opposed to IVA’s are HSBC. They demand a minimum 40% dividend (rather than the 30% normal minimum) to allow any chance of them voting in favour of an IVA proposal. This means that if more than 25% of your debt by value is with the HSBC, you will need to be able to make an offer a repayment of 40% of the total debt.

Did you know that HSBC stands for Hong Kong and Shanghai Banking Corporation?

Please make a comment
Have you had an IVA disapproved by a single creditor for reasons you consider unreasonable? Please share your experience by leaving a comment.

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