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A scheme of arrangement (or a "scheme of reconstruction") is a court-approved agreement between a company and its shareholders or creditors (e.g. lenders or debenture holders). It may affect mergers and amalgamations and may alter shareholder or creditor rights.
Schemes of arrangement are used to execute arbitrary changes in the structure of a business and thus are used when a reorganisation cannot be achieved by other means. They may be used for rescheduling debt, for takeovers, and for returns of capital, among other purposes. It is not a formal insolvency procedure, but it can be used alongside insolvency procedures such as administration.[1]
- ^ Alastair Goldrein, 'Ready, Willing and Able, but Perhaps Not Always Acceptable: UK Schemes of Arrangement in Europe' (2011) 7 Pratt's J Bankr L 113