Compositions and schemes of arrangement, Financial Accounting


The debtor may lodge a written proposal with the Official Receiver for a composition or other arrangement of his affairs within four days of submitting his statement of affairs, or such further time as the Official Receiver may allow. The procedure thereon is as follows:

(a) The Official Receiver must summon a meeting of creditors before the conclusion of the public examination, sending a copy of the proposal to each of them with his report thereon;

(b) The proposal must be approved by a majority in number and three fourths in value of all creditors who have proved;

(c) If the proposal is accepted by the creditors, it must be approved by the court, three days' notice of hearing being given to each creditor; the hearing cannot take place until after the conclusion of the examination;

(d) The court cannot approve the proposal until it is heard the Official Receiver's report on the debtor's conduct and any objections of the creditors: the court should approve the proposal if satisfied that the statutory requirement have been complied with, and it is in the interests of creditors generally and not contrary to public policy.

(e) The court must refuse to approve it if:

  • The terms are unreasonable or not for the benefit of the creditors generally, or
  • Any of the facts that would disentitle a bankrupt to an immediate unconditional discharge from bankruptcy are proved unless provision is made of at least Shs 25 per Shs 100 on all provable unsecured debts, or
  • Provision is not made for the prior payment of preferential debts;


(f) If approved by the court, the scheme is binding in respect of all provable debts, except those from which the debtor would not be released on discharge.

(g) The scheme may be annulled if:

  • The debtor defaults in payment, or
  • It cannot proceed without injustice or undue delay to the creditors or the debtor, or
  • The court's consent was obtained by fraud.


In practice, such proposals are rare; of a debtor wishes to put forward a scheme, he will normally do so before bankruptcy proceedings are begun.

Posted Date: 12/12/2012 6:29:44 AM | Location : United States

Related Discussions:- Compositions and schemes of arrangement, Assignment Help, Ask Question on Compositions and schemes of arrangement, Get Answer, Expert's Help, Compositions and schemes of arrangement Discussions

Write discussion on Compositions and schemes of arrangement
Your posts are moderated
Related Questions
1. Lett Corp declared and issued a 15% stock dividend when they had 100,000 shares of common stock issued and outstanding. The market price of the stock was $20 per share on the de

The market value of a bond is equal to: The present value of all future cash payments provided by a bond The present value of all future interest payments provided by a bond The pr

Voluntary settlements The trustee can claim all property settled by the bankrupt on other persons within two years preceding the bankruptcy unless made: a. Before and in consi

1. Assume that the money market is initially in equilibrium for an economy. Explain with the aid of a diagram how the market adjusts to (i) an increase in money supply (ii

You are a manager at the DaimlerChrysler. Daimler-Chrysler has lost money on the Smart car since the first model rolled off the assembly line in 1998. By bringing its little car in

The John Company maintains a checking account at the Bank of the Cumberland. The bank provides a bank statement along with canceled checks on the last day of each month. The Octobe

Q. A ltd. Company has equity share capital of Rs. 5,00,000 divided into shares of Rs. 100 each. It wishes to gain further Rs. 3,00,000 for expansion cum modernization plans. The co

John Chan considers buying a six-month stock futures contract on the shares of Li & Fung Limited. Shares of Li & Fung Limited are now trading at $50 per share and it is expected th

Thatcher Corporation's bonds will mature in 12 years. The bonds have a face value of $1,000 and an 11.5% coupon rate, paid semi-yearly. The price of the bonds is $1,050. The bonds

I am trying to prepare a statement of cash flows for my accounting class. My professor didn''t give me a sales price for the equipment that was sold. I have that it originally cost