189 4.2 Arrangement and reconstruction


By the end of this sub unit, you should be able to:

1. Explain the governing legislations on arrangement and reconstruction.

2. Describe the concepts and knowledge of arrangement and reconstruction.

3. Describe the procedures involved to under take the scheme of arrangement.

4. Explain the right of company to apply to the Court for a restraint proceedings.

5. Describe the effect of a restraining order given to the company and the steps to be taken by the company.

6. Explain the right of Court, the effect of Court order in relation to reconstruction and amalgamations.



When company faces financial difficulties and is unable to pay its creditors, it runs into risk of being wound up. However, if creditors are prepared to compromise, either to accept payment of a lesser amount than the full debt or to agree that debt be converted into another form of payment other than cash, this arrangement will spare the company from being wound up and continue its business.


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