If My Company Goes Into a Deed of Company Arragement, Can Creditors
Pursue My Personal Guarantee?

If a company goes through voluntary administration and creditors vote for a deed of company arrangement, can creditors with personal guarantees against the director pursue them? Yes, they can.

The next logical question is what steps can the director take to bind or otherwise deal with the creditors? The debt must be divided into two parts.

The first is the debt owed by the company, which is covered by the deed of company arrangement.

The other part is the personal guarantee against the director. The best solution is to negotiate with the creditor.

For instance, if the company offers a distribution under the deed of company arrangement, would the creditor accept it in full payment of the personal guarantee? Some creditors may be willing to negotiate, while others may not. If they are not, the director may need to make further payments or negotiate, or if that is not possible, they might have to look into other options to discharge the personal liability debt.

In the most pessimistic scenario, if that was not going to be worthy, the Director may need to consider some kind of Part X arrangement with their loan bosses in an individual limit or, in the most dire outcome
conceivable, a potential bankruptcy.

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