arrangement
Definition
Private or court-mediated agreement between a debtor and unsecured creditors, under which the creditors agree to settle for a certain fraction of monies owed by the debtor. When it is a voluntary agreement, it is called scheme of arrangement and is governed by the ordinary law of contract, otherwise (if the debtor is insolvent) it is a deed of arrangement which is governed by the relevant statute. The primary objective of an arrangement is avoidance of bankruptcy. See also letter of lenienency.
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