A Scheme of Arrangement is a compromise or arrangement between a company and its creditors, or any class of them, or between the company and its members, or any class of them. It is a process involving approval of a compromise or arrangement by the statutory majorities of the relevant class(es) of creditors/members that, with the sanction of the court, allows a company to implement such compromise or arrangement which will be binding on all of the affected members/creditors. A Scheme of Arrangement are often used to effect corporate restructuring / reorganisation. Provided that the necessary class consents and court sanction are obtained, a scheme can be used to effect almost any group restructuring proposal.
There are other advantages of a scheme of arrangement to effect a restructuring:
The assignment of contract debts, present or future, is a form of security frequently offered (or required) in financing transactions. It is particularly common, for example, in project and shipping financing, where moneys due under contracts with customers, or the right to sue for performance (by, for example, construction contractors or ship charterers) are assigned to banks, not only as security in the narrow sense but to enable the banks, if necessary, to step into the shoes of the company raising the finance to ensure that the project (or the ship as the case may be) is able to earn the revenue required to repay moneys raised.
The reason for distinguishing legal from equitable assignments is a matter of procedure (not as is often assumed, a question of priority. If the assignor is not to be before the court the assignor must retain no interest in the property assigned, and therefore provides that a legal assignment must be absolute (one of the key requirements of the section).
The requirement for an absolute assignment takes into account the position of the debtor who wants to pay the debt but wishes to know, with certainty, whether he should pay the assignor or the assignee. If the assignment is absolute he will know that he should pay the assignee. But if it is conditional or by way of charge, the question of the payee will depend on the satisfaction of the condition or, as the case may be, whether or not the obligation (to the assignor) secured by the charge has been fulfilled. The debtor will not know this simply by looking at his own books. Neither will the court. The position between assignor and assignee will require examination.
An equitable assignment:
(a) need not be absolute and may be conditional or by way of charge or of part only of a debt;
(b) does not generally have to be in writing or any particular form;
(c) does not require notice in writing to the debtor for validity; but notice should be given because notice prevents the debtor from doing anything further at the detriment of the assignee.
It is usually good practice to obtain from the debtor confirmation in writing that:
(a) the amount owing corresponds to what the assignee thinks is owing;
(b) the debtor has no notice of any other assignment;
(c) the debtor has no right of set-off against the assignor; and
(d) the contract between the debtor and the assignor has not been varied (for instance, by a side letter).
Such matters can normally be covered conveniently in the notice and a form of acknowledgement which is sometimes obtained as a condition precedent.
Where practicable (if there are not too many debtors, e.g. credit card debts), a legal assignment is generally preferred.
The main advantages are that:
(a) the assignor must be joined as a party (either as co-plaintiff or co-defendant) to any proceedings commenced in respect of an equitable assignment against the debtor.
(b) The various doubts relating to the necessity of consideration to support an equitable assignment do not apply in the case of a legal assignment;
(c) The equitable assignee of a legal chose in action cannot give a valid discharge to the original debtor unless expressly empowered to do so.
In some cases, these advantages may not seem particularly important. The essential features of any assignment in a financing transaction will usually be that (i) it is in writing and (ii) notice is given to the debtor; and both these can be achieved whether the assignment is legal or equitable.
Assignment Agreement of Agreement / Contract
Third Party Assignee
Business Acquisition Agreement - Simple
Company Acquisition Agreement - Simple
Full Transfer and Release
Partial Transfer and Release
Notice of Assignment of Agreement / Contract