Companies thinking of bankrupting someone who owes them money should think again. That is the verdict of insolvency specialist, Antony Fanshawe of Fanshawe Lofts reporting on the findings of a recent survey.

Mr Fanshawe is regional chairman of R3, the body which represents professionals who work with under-performing companies. R3 has just published a survey which finds that creditors can usually expect 32p in the pound back from bankrupts but a long-term arrangement could yield 73p.

The survey found that Individual Voluntary Arrangements (IVA's) give average returns of 84 per cent to secured creditors, 85 per cent to preferential creditors and 51 per cent to unsecured creditors. But first-time bankruptcies give only 40 per cent, 35 per cent and 22 per cent respectively.

An IVA is a legal agreement between the debtor and the creditors supported by the court. It has to be supervised by a licensed insolvency practitioner and usually lasts three to five years.

"IVA's work for both creditor and debtor" says Antony Fanshawe. "A debtor in an IVA does not suffer the stigma which is attached to bankruptcy. Details are not publicised, credit ratings are not affected as severely and creditors get the chance to get a large proportion of their money back.

"However the future does not look rosy for this win-win tool. The proposed Enterprise Bill will make opting for bankruptcy so easy that the IVA may die a slow death.

"It is ironic really that in its efforts to find a procedure to that encourages failed entrepreneurs to start again, the government has lost sight of the need to ensure that losses suffered by creditors are kept as low as possible," concludes Fanshawe.