Scheme of arrangement
A debt restructuring agreement requires all parties involved to mutually agree on the terms of the restructuring plan, and such plans are commonly implemented under a Scheme of arrangement which serves as an alternative route to borrowers especially in complex and difficult situations:
- A Scheme is an application to the Court for a voluntary reorganisation under the Companies Act
- A restructuring plan or Scheme is devised and will be put up for creditors’ approval through a voting process in a court-convened meeting
- Once the requisite approval is obtained, an application will be made to the Court to sanction the Scheme and it will be binding on all creditors under the Scheme
- The Court may restrain proceedings against the borrower during the proposed Scheme period
- Under a Scheme of arrangement, the management retains control of the company. As an independent financial adviser, we can act to devise, propose and negotiate a debt restructuring plan via a Scheme between a borrower and its creditors, and subsequently administer the implementation of the approved Scheme and act as the Scheme Administrator