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Deed of Company Arrangement
I need a Deed of Company Arrangement for a company undergoing financial restructuring, which outlines the terms agreed upon by creditors and the company to settle debts, including a timeline for payments, any debt forgiveness, and the roles and responsibilities of the administrator overseeing the arrangement.
What is a Deed of Company Arrangement?
A Deed of Company Arrangement helps struggling Dutch businesses avoid bankruptcy by creating a legally binding plan between a company and its creditors. It's a rescue tool that gives troubled companies breathing room to restructure their debts and continue operating while protecting creditors' interests.
Under Dutch insolvency law, this arrangement lets businesses negotiate new payment terms, restructure operations, and potentially save jobs - all supervised by a court-appointed administrator. It's similar to a surseance van betaling (suspension of payments) but offers more flexibility in how the company can reorganize its affairs and settle outstanding debts.
When should you use a Deed of Company Arrangement?
Consider a Deed of Company Arrangement when your Dutch business faces serious financial difficulties but still has potential for recovery. It's particularly valuable when you need time to restructure debts while keeping essential operations running, especially if you have multiple creditors and want to avoid full bankruptcy proceedings.
The arrangement works best when your company can demonstrate a viable path to recovery. For example, if you're dealing with temporary cash flow problems but have strong underlying business fundamentals, or when restructuring specific parts of your operation could restore profitability. Acting early, while you still have assets and negotiating power, dramatically improves your chances of successful reorganization.
What are the different types of Deed of Company Arrangement?
- Basic Recovery Plan: The simplest form of a Deed of Company Arrangement, focusing on debt restructuring and payment schedules with minimal operational changes
- Full Restructuring Deed: Comprehensive arrangement covering debt reorganization, operational restructuring, and management changes
- Asset Protection Arrangement: Specifically designed to preserve key business assets while negotiating with creditors
- Creditor-Specific Plan: Tailored arrangements for different classes of creditors, often used when dealing with both secured and unsecured debt
- Holding Structure Deed: Used when reorganizing complex corporate groups or parent-subsidiary relationships under Dutch law
Who should typically use a Deed of Company Arrangement?
- Company Directors: Initiate and negotiate the Deed of Company Arrangement, remain responsible for day-to-day management during restructuring
- Court-Appointed Administrator: Oversees the arrangement process, ensures compliance with Dutch insolvency laws, and monitors implementation
- Creditors: Review, negotiate, and vote on the arrangement terms, including major suppliers, banks, and tax authorities
- Legal Advisors: Draft the deed, ensure legal compliance, and advise on restructuring options
- Insolvency Practitioners: Provide expert guidance on viability and help structure the arrangement terms
How do you write a Deed of Company Arrangement?
- Financial Assessment: Gather detailed financial statements, cash flow projections, and current debt obligations
- Creditor Information: List all creditors, amounts owed, and security arrangements
- Business Plan: Prepare a viable recovery strategy showing how the company will return to profitability
- Asset Inventory: Document all company assets, their current value, and any existing claims
- Stakeholder Approval: Secure preliminary agreement from major creditors on proposed terms
- Documentation Review: Use our platform to generate a legally compliant deed that includes all mandatory elements under Dutch law
What should be included in a Deed of Company Arrangement?
- Company Details: Full legal name, registration number, and registered address of the company
- Administrator Powers: Clear outline of the administrator's authority and responsibilities
- Payment Terms: Detailed schedule of payments to creditors, including amounts and timeframes
- Operational Controls: Specific measures for company management during the arrangement period
- Creditor Rights: Clear statement of creditors' rights and voting mechanisms
- Termination Provisions: Conditions for early termination or default of the arrangement
- Compliance Statement: Declaration of adherence to Dutch insolvency laws and regulations
What's the difference between a Deed of Company Arrangement and an Intercompany Agreement?
A Deed of Company Arrangement differs significantly from an Intercompany Agreement, though both deal with corporate relationships. While a Deed of Company Arrangement focuses on restructuring a distressed company's obligations with external creditors under court supervision, an Intercompany Agreement manages ongoing relationships between related companies in a corporate group.
- Legal Framework: Deeds of Company Arrangement operate under insolvency law with court oversight, while Intercompany Agreements function under standard contract law
- Purpose: The Deed aims to rescue struggling businesses and protect creditors, whereas Intercompany Agreements regulate routine transactions between affiliated companies
- Duration: Deeds typically have a finite restructuring period, while Intercompany Agreements often govern ongoing operational relationships
- Parties Involved: Deeds include external creditors and court administrators, while Intercompany Agreements only involve related group entities
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