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Frequently Asked Questions


Formal Scheme of Arrangement

What is a Formal Scheme of Arrangement?

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 unlike bankruptcy;

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 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.