Creditor strategy in individual insolvency

Explains the option of individual voluntary arrangements (IVAs) when formal insolvency proceedings are taken against a UK individual, noting their rapid growth since they were introduced by the Insolvency Act 1986. Applies games theory (the prisoner’s dilemma) to previously published research data (Pond 1988) on the choices made by debtors and creditors for IVAs in order to analyse and discuss their srrategies. Shows that creditors can do better by assessing the risk of IVA failure, using it to discount the projected dividend and comparing the result with the returns from bankruptcy. Considers the implications for policy makers and others involved.