arrangement

Banking: A private or court-mediated agreement between a debtor and unsecured creditors, under which the creditors agree to settle for a certain fraction of monies owed by the debtor.

When it is a voluntary agreement, it is properly called a scheme of arrangement and is governed by the ordinary law of contract. Otherwise (if the debtor is insolvent) it is a deed of arrangement which is governed by the relevant statute. The primary objective of an arrangement is avoidance of bankruptcy. See also letter of leniency.