Case Study 9

Mr Williams raises a query. He had recently been elected as a parent governor at his child’s school and had attended two governing body meetings as well as induction training offered by the Local Authority. He was very much enjoying the new role. This past week, he entered into an Individual Voluntary Arrangement (IVA) with some creditors. An IVA is a formal alternative for individuals wishing to avoid bankruptcy. He was aware that he could no longer be a governor if he was declared bankrupt but was unsure about his position now he had an IVA.

An IVA is essentially a legally binding contract between a debtor and their creditors. It allows an individual to settle a debt within a reasonable and fixed period of time, usually five years, according to a contract and is an alternative to bankruptcy. It allows a debtor:

  • To settle outstanding unsecured debts by paying a proportion of the amount that he owes to his creditors.
  • To come to an arrangement with creditors over the payment of debts. (Section 253(1), Insolvency Act 1986)

Regulation 6 of Schedule 5 of The Government of Maintained Schools (Wales) regulations 2005 states that

  • A person is disqualified from holding or continuing to hold office as a governor of a school if —
    – (a) he or she has been adjudged bankrupt or sequestration of his or her estate has been awarded and (in either case) he or she has not been discharged and the bankruptcy order has not been annulled or rescinded; or
    – (b) he or she has made a composition or arrangement with, or granted a trust deed for, his or her creditors and has not been discharged in respect of it.

The issue is therefore whether the IVA amounts to “a composition or arrangement with … his or her creditors”.

This statement is wide enough to cover IVA and therefore prevents him from continuing as a governor until it is discharged.