Overview

It is an irony of the current economic downturn that a corporate law rather an explicitly insolvency-related procedure has become such a key restructuring tool. A scheme of arrangement is a court-sanctioned compromise that can be used to alter the rights and obligations of the scheme company and its creditors and/or members or any class of them.

Schemes have been used as a way of implementing a complex restructuring on a number of occasions over the last 15 years. However, given the cost and time they take to implement, they are typically only used for large companies with a significant amount of debt. In order to put forward a scheme, the company will need to prepare an explanatory statement that contains the information the scheme creditors need in order to exercise their vote.

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