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Corporate
Insolvency |
Personal Insolvency |
Turnaround Management
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Informal Arrangements
Where there are relatively small number of creditors
it may be possible to negotiate with these creditors
without the need for a formal insolvency appointment.
Where creditors agree to reduce their claim against
the debtor or agree to a repayment arrangement,
costs can be contained compared to formal bankruptcy
or Part X Arrangements.
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Part X Arrangements
An insolvent person may avoid bankruptcy by reaching
an agreement with his or her creditors for the satisfaction
of their claims. This agreement is known as a Part
X Arrangement. A Registered Trustee works with the
debtor to deal with creditors claims and to help
resolve the problems that contributed to the solvency
difficulties.
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Debt Agreement
Similar to a Part X Arrangement if the debtor meets
criteria concerning income, assets and debt quantum
a Debt Agreement may be appropriate. A Debt Agreement
is a cost effective method of resolving a personal
insolvency problem. Once ratified by creditors a
Debt Agreement releases the debtor from their debts.
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Bankruptcy
Insolvency occurs when a debtor is unable to pay
his or her debts as and when they fall due. A debtor
may become a bankrupt voluntary by filing a debtors
petition together with his/her statement of affairs;
or involuntary by a creditors petition. In both
cases a trustee in bankruptcy is appointed and the
effect on the bankrupt is identical. The process
commits the trustee to investigate the bankrupt's
financial affairs and provides relief from the pressure
of the creditors. Bankruptcy provides for an equitable
distribution of the bankrupts assets to all creditors.
Bankruptcy is for a term of 3 years from the date
of filing the Statement of Affairs, unless extended
to 5 or 8 years for non-compliance with the law.
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