This is a formal process enabling a compromise to be entered into between a company and its creditors with the intention of preserving the business.
The key elements are:
- The business needs to be commercially viable with the ability to return to profitability
- After a review of the business, a proposal is submitted incorporating a full or partial return to creditors over a 2 to 5 year period
- A vote must be passed by a majority in value of 75% of creditors
- All creditors are then legally bound to accept the terms of the Arrangement