This is a process where a proposal is put to the company’s creditors and if 75% of the value of those who vote are in favour of the proposal then all of the company’s unsecured debt is rolled into the arrangement.

Normally the company will then pay a monthly amount for a period of 5 years to satisfy the debt in full. More often than not the total amount paid is less than the total amount owed.

This can be a very effective solution and avoids the company going into any form of liquidation. Therefore it continues as a going concern and its trading position need not be effected.

Often the voluntary arrangement includes the appointment of a company Administrator and therefore often people associate this process with Administration.