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Simple English definitions for legal terms
arrangement with creditors
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A quick definition of arrangement with creditors:
An arrangement with creditors is when someone who owes money to others comes to an agreement with those people about how they will pay back the money. This can involve settling the debt for less than what is owed, extending the time to pay, or finding a way to satisfy the debt in some other way. In some cases, a detailed plan called a bankruptcy plan is created to help the debtor get back on track with their finances. This plan must be approved by a court before it can be put into action.
A more thorough explanation:
An arrangement with creditors is an agreement made by a debtor with their creditors to settle, satisfy, or extend the time for payment of debts. This is often done in the context of bankruptcy proceedings.
A bankruptcy plan is a detailed program of action created by a debtor or their creditors to guide the debtor's rehabilitation, continued operation, or liquidation, and payment of debts. The plan must be approved by the bankruptcy court before it can be implemented.
For example, if a business is struggling to pay its debts, it may file for bankruptcy and work with its creditors to create a plan for paying off those debts over time. The bankruptcy court would need to approve this plan before it could be put into action.