Legal Definitions - arrangement with creditors

An arrangement with creditors is an agreement made by a debtor with their creditors to settle, satisfy, or extend the time for payment of debts. This is often done in the context of bankruptcy proceedings.

A bankruptcy plan is a detailed program of action created by a debtor or their creditors to guide the debtor's rehabilitation, continued operation, or liquidation, and payment of debts. The plan must be approved by the bankruptcy court before it can be implemented.

For example, if a business is struggling to pay its debts, it may file for bankruptcy and work with its creditors to create a plan for paying off those debts over time. The bankruptcy court would need to approve this plan before it could be put into action.