|Bankruptcy: composition and arrangements|
These apply to schemes agreed to by the creditors after a receiving order. Schemes before a receiving order are deeds of arrangement. There are two forms of Composition and Arrangement one before adjudication (Section 16 of the Act), one after adjudication (Section 21).
(1) Section 16. This scheme must be lodged by the debtor within four days of his statement of affairs. It is sent to creditors. To be accepted it must be passed by a majority in number and three-quarters in value of all creditors who have proved. Once accepted it binds dissenting creditors. The scheme must be approved by the court. The court hearing is after the public examination of the debtor. The court will not pass the scheme if it does not consider it beneficial to the creditors generally, or does not provide for prior payment of preferential creditors. The scheme does not in any event release the debtor from liability for damages for seduction or under an affiliation order or against him as co-respondent in a divorce case.
(2) Section 21. The procedure is similar to that under Section 16 but the consequences of court approval are not identical as the debtor is already bankrupt. Whether the adjudication is annulled depends on the court.
|Reference: The Penguin Business Dictionary, 3rd edt.|