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  • Section 73 Proposal

    Section 73 Proposal, Alternative Options To Bankruptcy

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  • Section 73 Proposal

    Section 73 Proposal, Alternative Options To Bankruptcy

Section 73 Proposal

Section 73 Proposals are formal agreements between a debtor, creditors, and trustees, typically before or during a court bankruptcy proceeding.

Section 73 of the Insolvency Act is an option available to people who have already been declared bankrupt. It enables them to be “annulled” from bankruptcy.

If a debtor’s proposal under Section 73 of the Bankruptcy and Insolvency Act is accepted by creditors, the individual is discharged from bankruptcy; otherwise, assets remain under the control of a trustee.

A bankrupt can submit a proposal to creditors under Section 73 of the Bankruptcy Act during the term of the bankruptcy.

To have your bankruptcy annulled, you must persuade creditors by presenting a Section 73 Proposal. This will negate the bankruptcy.

section 73 proposal

Section 73 Proposal Explained in more detail

The Section 73 Proposal has two different Categories:

  • When a company declares bankruptcy, the company may propose a composition. A composition is an agreement to pay funds into the administration, which will then be available to pay creditors.
  • Scheme of arrangement–involves consideration, which includes payment of funds from the bankrupt to creditors and the sale/transfer of the property.

In order to be accepted by creditors, the Section 73 proposal must be passed by a special resolution. This means a majority of the vote greater than 75 percent in value must be reached, and more than 50 percent of those voting must support the proposal. If accepted by creditors, the individual will be annulled from bankruptcy.

The Section 73 Proposal can be terminated in the following ways:

  • If a bankruptcy debtor fails to fulfill the terms of an approved reorganization plan, creditors or trustee can terminate it.
  • The Court must authorize the composition of debts. This is due to the fact that a composition cannot be convenienced without injustice or undue delay to creditors. By the non-compliance or misinterpretation by the former bankrupt.

The Section 73 Proposal contains terms and guidelines that are legally enforceable by a trustee if the borrower defaults on its obligations.

When Does the Section 73 Proposal End?

A person may be declared bankrupt once that person does not perform in his or her role under the agreement. When all parties have completed their roles and responsibilities, the Section 73 Proposal will conclude.

Benefits to an individual and the creditors with a Section 73 proposal include:

  • The terms of any offer by an individual to creditors can be flexible under proposed provisions of bankruptcy law.
  • A bankruptcy proceeding is a legal process that provides for the receipt of funds and distribution to creditors in an orderly manner, while offering the opportunity to rebuild and move forward.
  • Many creditors receive a greater return and do so more quickly than the bankruptcy continuing.
  • Bankruptcy fees and outlays may be lower than the continuing costs of debt.

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Personal Insolvency

  • Bankruptcy
  • Liquidation
  • Trustee
  • Part IX Debt Agreement
  • Types Of Liquidation

Corporate Insolvency

  • Insolvency
  • Liquidator
  • Company Liquidation Advice
  • Dissolve Your Company
  • Receivership
  • Business Restructuring
  • Business Liquidation

Liquidation

  • Company Liquidation Process
  • Company Liquidation Packages
  • Liquidators Role
  • Insolvent Trading
  • Shadow Directors
  • Preferential Payments
  • Director Penalty Notice

Administration

  • Getting Started With Administration
  • Why Use a Voluntary Administrator
  • Administrator
  • What Is Voluntary Administration

Bankruptcy

  • Section 73 Proposal
  • Bankruptcy and Creditors
  • Role of a Trustee in Bankruptcy
  • How Does Bankruptcy Effect My Life
  • How Are People Made Bankrupt
  • Bankruptcy When Does It End?
  • Bankruptcy How Do I Get Started?
  • What is Bankruptcy

Personal

  • Bankruptcy
  • Liquidation
  • Trustee
  • Part IX Debt Agreement
  • Types Of Liquidation

Corporate

  • Insolvency
  • Liquidator
  • Company Liquidation Advice
  • Dissolve Your Company
  • Receivership
  • Business Restructuring
  • Business Liquidation

Liquidation

  • Company Liquidation Process
  • Company Liquidation Packages
  • Liquidators Role
  • Insolvent Trading
  • Shadow Directors
  • Preferential Payments
  • Director Penalty Notice

Administration

  • Getting Started With Administration
  • Why Use a Voluntary Administrator
  • Administrator
  • What Is Voluntary Administration
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