What is a Part 10 Insolvency Agreement?
A Part 10 Insolvency arrangement is essentially that, an arrangement to repay your creditors. Your creditors find a Part 10 more favorable than a Bankruptcy as they will receive a higher return under a part 10 Personal Insolvency Agreement. It is suitable for companies or individuals with large debts that are unable to be paid, and wish to avoid a full bankruptcy. A Personal Insolvency Agreement comes under Part 10 (Part X) of the Bankruptcy Act.
A Part 10 Personal Insolvency Agreement needs to be assessed to meet your financial needs, as it can affect your future business dealings and ability to trade. We recommend the first course of action is to try and avoid a Part 10 Insolvency agreement by first investigating debt consolidation options.
Types of Part 10 Insolvency Agreements?
There are three types of arrangements that can be proposed under a Part 10 Insolvency as an alternative to bankruptcy:
- Deed of arrangement
- Deed of assignment
Deed of arrangement: The arrangement of the debtor’s affairs with a view to payment, in whole or in part, of the debts. It may be a formalised arrangement with creditors to pay the debts over time. It can involve the transfer of property to the trustee to be sold and funds distributed among the creditors. The debtor is not released from his or her debts unless the deed of arrangement specifically provides for such release.
Deed of assignment: Provides the transfer of all of the debtor’s divisible property, sale and distribution of the benefit to the creditors. It essentially produces the same result as bankruptcy, but the debtor avoids bankruptcy and other bankruptcy consequences.
A composition: Provides avenues for the creditors to accept payment of debts in installments or to accept a lessor amount than owed, in full satisfaction of their debts. The process generally involves the debtor appointing a person (controlling trustee) to take control of his or her financial affairs and negotiate terms with the creditors. The controlling trustee convenes a meeting of creditors to vote on the proposal, who can either accept, reject the proposal, or require the debtor to petition for his or her own bankruptcy.
Under Part 10 Insolvency Agreement the debtor’s financial future is given over to the creditors who will make a judgement about the proposal based on their own knowledge of the debtor, and make a decision on commercial grounds. The decision is based on assessment of information given by the controlling trustee, information obtained at the creditors meeting, the creditors individual knowledge of the debtor and then a decision is made on commercial grounds or what will return the creditors the greatest financial reward.
If the Creditors accepts the Proposal then a Trustee is appointed for sale of assets and distribution of funds to the creditors. The Trustee is not necessarily the same party as the controlling Trustee.
If you are seeking information on Part 10 Insolvency Agreements and more specifically, if you would prefer to avoid a Part 10 via Debt Consolidation then contact the Loan Saver Network on 1300 796 850 today.