Property market - IVA case study

Situation

After buying two holiday homes off plan in their favourite European location, a husband and wife found themselves defaulting on their international mortgages due to volatile interest rates, a fact they had not been made aware of at the time of purchase.

The couple never took ownership of the holiday homes due to these mortgage defaults. The lenders did not repossess the properties due to the property market in the location declining into a negative equity situation. Instead, they pursued the couple through the international court with one of the lenders taking action in the UK to try and secure a charging order on their UK residential property.

Approach

Following our introduction to the individuals, we concluded that an Individual Voluntary Arrangement (IVA) could only be considered if either of the lenders were willing to consider this option, as combined they owned 98% of the debts.

After presenting a draft IVA to the UK court, the lender agreed to consider this, as the only other option was bankruptcy, which did not offer full repayment.

The IVA was approved, and creditors proving in the IVA were paid 100p in £.

International support in communicating with the lenders

As both lenders were located in Europe, we were able to work with our colleagues in the same country to understand the legal framework and also to make contact in the local language so that we could assert the legal position regarding the European properties and anticipated shortfall.

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