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Definition
A scheme of arrangement is a Companies Act compromise, sanctioned by the court, between a company and classes of its creditors or members. Once each class approves by 75% by value and the court sanctions it, it binds even those who voted against.
In plain terms
It is a formal, court-blessed restructuring used mostly by larger companies to reset their debts in an orderly, binding way.
Why it matters for your company
Schemes are complex and court-driven, so they suit sizeable restructurings rather than everyday cash squeezes. For most SMEs a CVA or negotiated forbearance is the practical route.
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