voluntary arrangement

A procedure provided for by the Insolvency Act (1986), in which a company may come to an arrangement with its creditors to pay off its debts and to manage its affairs so that it resolves its financial difficulties. This arrangement may be proposed by the directors, an administrator acting under an administration order, or a liquidator. A qualified insolvency practitioner must be appointed to supervise the arrangement. This practitioner may be the administrator or liquidator, in which case a meeting of the company and its creditors must be called to consider the arrangement. The proposals may be modified or approved at this meeting but, once approved, they bind all those who had notice of the meeting. The court may make the necessary orders to bring the arrangement into effect. The arrangement may be challenged in court in the case of any irregularity. The aim of this legislation is to assist the company to solve its financial problems without the need for a winding-up (see liquidation).

Accounting dictionary. 2014.

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