A Scheme of Arrangement is a corporate rescue and restructuring mechanism set out under the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) of the Singapore regulatory framework. Through a Scheme, a company can put forward a proposal to its creditors to restructure its debts and potentially deliver stronger recoveries to creditors than under an insolvent liquidation. A Scheme is subject to approval by a majority in the number of each class of creditors holding at least 75% of the liabilities owing by the Company and the Court’s sanction.
A creditor-approved and Court-sanctioned Scheme will be legally binding on both the Company and its creditors, and the IRDA sets out clear timelines, requirements and Court processes to ensure that creditors have enough information to make an informed decision on the proposed terms.