INS10167 - Introduction to Voluntary Arrangements

A fair and optimum offer is made to creditors

A 'fair and optimum offer is made to creditors' means that there is

• no unacceptable expenditure
• the arrangement cannot be improved upon
• all obligations under the arrangement are achievable.

Creditors have a right to expect a fair return in a VA and this requires some sacrifice by the debtor. But it is counter-productive to commit a debtor too heavily by the simple equation 'income less essential expenditure equals monthly contribution.'

Individuals need to feel that they are doing something more than work for their creditors for years; they are entitled to some reasonable personal expenditure.

Companies need working capital and some leeway for investment to keep them competitive and for contingencies such as bad debts

• saying 'no' to unnecessarily high drawings or personal expenditure does not compromise the rescue culture.

It simply requires those running a business to adjust their personal expectations to their current circumstances.

• support of a proposal is not dependent upon receipt of a minimum level of dividend.

• Judge each case separately on its merits and the available information.

If the criteria are satisfied accept it on the basis that saving viable businesses will stimulate enterprise and ultimately generate more revenue.

Explore arrangement prospects yet remain fair to those who pay on time.