Formal Scheme of Arrangement
What is a Formal Scheme
A Formal Scheme of Arrangement is an agreement
between you and a 60% majority of your creditors
that is imposed on all remaining creditors by
a High Court Judge.
Who is eligible to enter
a Formal Scheme of Arrangement?
You satisfy the legal criteria for eligibility
where 60% of your creditors agree to enter the
proposed arrangement and you can get someone to
underwrite your arrangement.
What is the procedure involved
in a Formal Scheme of Arrangement?
You must issue a Petition for the protection
of the Court which must be supported by an affidavit
that sets out the background of your financial
affairs and the reasons you have financial difficulties.
Our retained legal team will prepare this on your
behalf and on your instruction. You have a duty
to disclose all information that may be material
to your application and we will not consider representing
anyone who fails to do so.
What are the advantages
of a Formal Scheme of Arrangement (FSA)?
1. Once your FSA is finalised, you and your creditors
are bound by its terms. This provides you with
financial certainty and peace of mind looking
into the future;
2. After entering a FSA your creditors will no
longer be in a position to bombard you with threatening
letters and phone calls on a constant basis;
3. Creditors who vote against the FSA are still
bound by it as long as 60% by number and value
agree to it;
4. Unlike a bankruptcy situation, you can continue
to trade or do business during the term of your
FSA and you are able to choose the type of assets
to provide to your creditors;
5. FSA’s are not advertised in newspapers
6. Administration and legal costs are lower than
bankruptcy, enabling higher payments for creditors;
7. An FSA should have much less impact on your
lifestyle, and depending on your occupation should
not affect your professional status;
8. An FSA helps you to eliminate your debt problems
responsibly in a manner which is fair and equitable
to you and to your creditors.
Why should my creditors
agree to a Formal Scheme of Arrangement?
It may be the case that your creditors will receive
more than they would if you were to go bankrupt.
As administration costs are lower in an FSA than
that of bankruptcy thereby more funds should be
available for payments to creditors.
Scheme of Arrangement; Debt Management
What is a scheme of arrangement?
Essentially a Scheme of Arrangement (SoA) is
the same as a Formal Scheme (above), but with
the consent of all your creditors. It is a formal
contract that you and your creditors voluntarily
enter into to restructure ad/or reduce the amount
that you owe and the time period in which you
have to pay..
The point here is that we are not trying to pull
the wool over anyone’s eyes – you
will repay the amount that you can, and if we
cannot convince the creditors to accept that amount,
then we may have other options.
How is that arrangement organised?
The trained negotiators at Debtfree.ie will make
arrangements to present your financial circumstances
to your creditors with a view to them agreeing
the proposals that we have prepared on your behalf.
It is part of the service that we offer, with
the ultimate resolution of your debt problems
as our goal.
Why should my creditors
agree to a Scheme of Arrangement?
It is probable that with our assistance breaking
your liabilities into manageable amounts your
creditors will receive more money in a more realistic
timeline over a shorter period if they accept
the proposals that we put to them on your behalf.
They avoid the significant legal costs that chasing
bad debts incur, and they can engage in the process
of recovering the amount that is agreed in a more
proactive way. Furthermore they will also receive
more than they would if you were to become a bankrupt.