Clifford Chance

Schemes of arrangement are provided for by Pt 5.1 of the Corporations Act 2001 (Cth) and are sometimes used to return a company to solvency although schemes are not used solely for this purpose. A scheme of arrangement is a statutory procedure used to implement a compromise or agreement between a company and a class or classes of its creditors or members.

Whilst schemes of arrangement involving the members of a company may be used in the context of a corporate reorganisation, schemes of arrangement involving the creditors of the company are generally used in the context of insolvency. Schemes of arrangement, while similar to DOCAs, actually require court approval and may be entered into at any time, rather than only when a company is in voluntary administration.