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Bankruptcy/Insolvency - Creditors Compromise

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If you don't want to become bankrupt then you might be able to negotiate a Compromise Agreement with you creditors. 

  • We give you all the law.
  • We give you all the procedures
  • We give you all the documents


If you can get them all on your side, then you can draft up a written Agreement recording the precise terms of the agreement. 

Provided you carry out the terms of that Agreement, such as time payment,  or a lesser lump sum payment, then the creditors bind themselves not to bankrupt you. 

It is all quite enforceable.  However, such an Agreement does not bind other creditors who might come out of the woodwork.  That is the beauty of ther formal  PART 5 Subpart 2 Proposal under the new Insolvency Act 2006.


If you cannot get the agreement of all of your creditors, but you can convince 75% of the value of your debts and 50% of the number of your creditors, then you are able to follow a fairly complicated procedure under what WAS KNOWN as a Part XV Proposal of the Insolvency Act 1967, but is now known as a PART 4 Subpart 2 Proposal under the new Insolvency Act 2006.


75% of the value of you debts.

50% of the votes of the individual creditors.

This procedure involves putting up a Proposal, circulating your creditors,and holding a publicly advertised meeting of creditors chaired by an independent trustee. 

If you get the numbers on your side, then you file the proposal in the High Court and there is a brief hearing where the High Court is asked to approve the Proposal.

The leading Court decisions show clearly that the Courts will really only be interested in seeing that the procedure has been followed correctly.

In that case, the Judge approved a compromise of between less than 3% of the total debt.

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Feedback/Blogs/Reviews from related topic: Alternative Dispute Resolution
"Membership No 186685
I have been unable to acquire any case law in regards to bankruptcy. I am thge alleged defendant in the matter and have opposed the application for bankruptcy as I am not the defendant. The case is now at the stage of the high court requiring a synopsis under 251a, I wish to make submissions in not being notified of the hearing at the district court after the notice of proceeding was served. The matter then got judgement without my knowledge and is now before the high court for bankruptcy. Please advise the procedure to locate any supportive case law that may assist with my application to set aside the bankrupcy claim.

Kindest Regards
I "

"You will certainly get a rehearing if you were not notified but, if you simply misread the documents you were originally served with then you could be in trouble. You must actively follow up on your obligation to file and serve a defence and not just wait for the Court to come to you. Good luck . . . Netlaw "
"Likewise . . . very helpful. Thanks. Gerald - May 2007 - Tauranga"
"Received notice from a creditors lawyer that they wish to put in companiy into liquidation and I have up to today upon receiving their letter. A Statory Demand was intially sent on 7 Aril 2008, which I reponded with a reply explaining that an arrangement (verbal) had been entered in by both parties which was to continue supply, once company got post dated cheques, company stopped surpply and but still continued to present cheques which was not the agreement which was entred into.
What position does that leave me if I want to legal challenge this. Without causing me excessive expresses.


Netlaw responds: If you say that they cannot properly sue because there was a new agreement for time payment, then you can apply for an injunction saying that the Statutory Demand Notice is wrong. But it will cost you. An injunction should not be done without legal advice. Type up a Statement setting out precisiely all the facts as you know them and see a lawyer as soon as possible. A letter shouid be sent to the other side saying how inappropriate the Demand procedure is when the subsequent agreement between the parties was made and kept by you. But you must get your facts right!"

Feedback/Blogs/Reviews from related topic: Alternative Dispute Resolution
"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
Feedback/Blogs/Reviews from related topic: Alternative Dispute Resolution
"I found this interesting. I want to sue for punitive damages and I was interested to learn that our courts are pretty conservative. I think the Welfare have quite wrongly taken my kids and I have found out that the affidavit they gave to a Judge to get an order to uplift them was known to the Welfare to be incorrect. They told the Judge that I had drug convictions but when I found out 5 months ago that they thought that I proved then to them that this was untrue yet I have now found that they have still put this false evidence in an affidavit. But they have also told other people about my "drug convictions". You have to watch these people. (name witheld) - May 2007"
Feedback/Blogs/Reviews from related topic: Alternative Dispute Resolution
"The fact examples or samples really helped me. Your topic also gave me confidence to speak up for myself. My case was a simple car accident but the other driver wouldn't pay and my lawyer was going to charge me $700 just to help. Netlaw allowed me successfully to "go it alone". Thanks. Thanks. I am on to making my own will now. Miriam (and hubbie)"
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