What is a voluntary arrangement?

This is almost what it sounds like. An individual or a Company can enter into either an Individual Voluntary Arrangement with creditors or a Company voluntary Arrangement. This avoids liquidation or personal bankruptcy and offers the creditors something rather than, probably, nothing. It might provide for a proportion of the debt to be paid, or the debt to be paid over a lengthier period of time. The process begins when the Directors or individual put a proposal to the nominee (a licensed insolvency practitioner.) The nominee puts a report to the Court. A meeting of creditors is then convened. If approved in the manner prescribed, then the VA is in effect. In the case of an IVA, there may be an interim order initially. The interim order provides the debtor with certain protection pending the IVA being ultimately approved. In order to approve an IVA at the creditors’ meeting, a majority of three quarters or more in value of creditors present in person or by proxy and voting is needed. A secured creditor may vote in respect of any part of the debt which is unsecured.

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