A Scheme of Arrangement is a legal process under the Companies Act 2006 in the UK that allows a company to restructure its debts with its creditors. This allows the company to avoid bankruptcy and continue to operate while also providing the creditors with a form of debt relief.
The Scheme of Arrangement process is typically initiated by the company itself, with approval from its board of directors. The company then seeks approval from its creditors, shareholders, and the court before the scheme can go into effect.
Under a Scheme of Arrangement, the company proposes a plan to restructure its debts over a specified period of time. This plan may include reductions in interest rates, alterations to repayment terms, or a complete write-off of outstanding debt.
Once the plan is approved by the court, all creditors and shareholders are bound by its terms. This means that if a creditor or shareholder does not agree with the plan, they will still be bound by it if it receives approval from the court.
Several loan companies in the UK have entered into a Scheme of Arrangement in recent years. One notable example is Amigo Loans, a guarantor loan company that entered into a Scheme of Arrangement in 2020.
Other loan companies that have entered into a Scheme of Arrangement include Provident Financial, which entered into a Scheme of Arrangement in 2020 as well, and BrightHouse, a rent-to-own retailer that entered into a Scheme of Arrangement in 2019.
In conclusion, a Scheme of Arrangement is a legal process that allows companies in the UK to restructure their debts with their creditors. Several loan companies have entered into a Scheme of Arrangement in recent years, including Amigo Loans, Provident Financial, and BrightHouse.