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Part IV · Debt Restructuring Arrangements

48. Debt Restructuring Arrangements: Secured Creditors and Property Rights

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

Without limiting the ability of parties to agree to the terms of a Debt Restructuring Arrangement, other than when provided under the provisions of this Part, an Arrangement may include terms providing for the satisfaction or restructuring of both unsecured and secured debts.

(2)

Subject to the rules on creditors’ approval of a debtor’s proposal under section 52, a Debt Restructuring

Arrangement may provide for the treatment of any property that is subject to a security, which may include-

(a)

the sale or disposition of the property that is subject to a security;

(b)

the surrender of the property to the debtor; or

Rescue, Rehabilitation and Insolvency

(c)

the retention by the secured creditor of the security.

(3)

Subject to the rules on creditors’ approval of a debtor’s proposal under section 52, a Debt Restructuring

Arrangement may include terms -

(a)

modifying the rights of a secured creditor; and

(b)

providing that a secured creditor will not realise its security while the arrangement is in force.

(4)

Subject to the rules on creditors’ approval of a debtor’s proposal under section 52, a Debt Restructuring

Arrangement may include terms providing for the reduction of the principal sum due in respect of a secured debt, only where the Arrangement specifies that the amount of the reduced principal sum is not less than the value of the security.

(5)

Subject to the rules on creditors’ approval of a debtor’s proposal under section 52, a Debt Restructuring

Arrangement may provide for -

(a)

the curing, within a reasonable time, of any default; and

(b)

maintenance of payments while the Arrangement is in effect, on any secured debt on which the last payment is due after the time of completion of the Arrangement under section 60.

(6)

Subject to the rules on creditors’ approval of a debtor’s proposal under section 52, a Debt Restructuring

Arrangement may provide for the —

(a)

curing of any default within a reasonable time;

and

(b)

maintenance of rent payments while the

Arrangement is in effect arising under a tenancy

Rescue, Rehabilitation and Insolvency agreement into which the debtor has entered with a relevant creditor.

(7)

Subject to the rules on creditors’ approval of a debtor’s proposal under section 52, a Debt Restructuring

Arrangement may provide for the -

(a)

curing of any default within a reasonable time;

and

(b)

maintenance of instalment payments while the Arrangement is in effect arising under an agreement, including a hire-purchase agreement, by means of which a debtor is using or has possession of goods.

Read on from s 49

Part V

Debt Rehabilitation Orders

Read on from Part V

Part VI

Read on from Part VI

Part VII

Personal Insolvency Register

Read on from Part VII

Part VIII

Read on from Part VIII

Part IX

Read on from Part IX

Part X

Compromises

Read on from Part X

Part XI

Micro Small Medium Enterprise (MSME) Company Debt Restructuring Arrangements

Read on from Part XI

Part XII

Read on from Part XII

Part XIII

Read on from Part XIII

Part XIV

Cross - Border Insolvency

Read on from Part XIV

Part XV

Read on from Part XV

Part XVI

Read on from Part XVI

Part XVII

Read on from Part XVII

Schedules