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.