Banking: A private or court-mediated agreement between a debtor and unsecured creditors, under which the creditors agree to settle for a certain fraction of monies owed by the debtor.
When it is a voluntary agreement, it is properly called a scheme of arrangement and is governed by the ordinary law of contract. Otherwise (if the debtor is insolvent) it is a deed of arrangement which is governed by the relevant statute. The primary objective of an arrangement is avoidance of bankruptcy. See also letter of leniency.
Use 'arrangement' in a Sentence
If you agree to an arrangement you must keep up your side of the bargain to keep your business reputation in tact.
We had an arrangement to meet at a certain place at a certain time and the other person did not show up and it made me mad.
The arrangement between the lender and the borrower was clearly laid out in the form of several different contracts we had access to.
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