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IVA - preferential creditors

IVA - preferential creditors

An IVA references:

- Standard creditors

- Preferential creditors

- Secured creditors

A creditor has a signed loan agreement secured against a house, however a formal charge/mortgage was not provided. The house was sold, and the creditor was not repaid from the resulting funds (they were spent elsewhere) - a breach of the agreement. Unfortunately there are no remaining funds.

The debtor is now broke with no assets and proposing an IVA - with substantial debts to other (unsecured) creditors emerging. Can the above creditor make any preferential claim in light of the original loan agreement?

Perhaps a legal question rather than an accounting question, but any perspective would be much appreciated.

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29th Feb 2016 04:58

Perspective
The legal effect of the agreement and whether the debtor's conduct amounts to a breach of it are straight down the middle legal questions, and I am not sure that there is any other perspective

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