A Deed of Arrangement is a written agreement between a debtor and his or her creditors, registered with the Insolvency Service, to manage and compose debts or arrange the debtor's affairs.
A Deed of Arrangement is a legally binding agreement between a debtor and his or her creditors to resolve outstanding debts without resorting to bankruptcy. This type of arrangement is registered with the Insolvency Service and can include a composition of debts or a scheme for managing the debtor’s financial affairs.
A composition of debts involves creditors agreeing to accept a partial repayment of the total debt owed by the debtor. This partial repayment is considered full settlement, thereby discharging the debtor from further liability.
A scheme of arrangement includes reorganizing the debtor’s financial affairs to make repayments more manageable. This could involve extending the repayment period or restructuring the debt.
A Deed of Arrangement allows debtors to settle their debts while avoiding the stigma and legal repercussions of bankruptcy. By negotiating with creditors, debtors can propose a plan that addresses how and when the debt will be repaid. The process involves drafting the deed, gaining approval from a majority of creditors, and then registering the deed with the Insolvency Service.