The Section 73 Proposal is a formal agreement between the Bankrupt, Creditors and Trustee.
In order to have your bankruptcy annulled, the creditors have to accept the Section 73 Proposal, and it will be as though the bankruptcy never occurred.
Section 73 Proposal Explained in more detail
The Section 73 Proposal has two different Categories:
Composition – It is more common that a bankrupt proposes Composition. A Composition is an agreement to pay funds into the administration, which will then be available to pay creditors.
Scheme of Arrangement – involves consideration, which includes payment of funds from the bankrupt and the sale/transfer of the property
The Section 73 Proposal can be terminated in the following ways:
If the terms are not fulfilled with, the creditors and/or trustee can terminate it
Usually under composition by order of the Court. This is due to the fact that the composition cannot proceed without injustice or undue delay to creditors. By non-compliance or misinterpretation by the former bankrupt.
Please note that the Section 73 Proposal has terms and guidelines that the trustee can enforce compliance in the event of default.
When Does the Section 73 Proposal End?
Lastly, the person can be bankrupt again if the person does not perform in their role of the agreement. This will result in termination of the agreement. Once all parties have completed their roles and responsibilities, the Section 73 Proposal will come to an end.
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