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Arrangement With Creditors
1. Introduction. Agreement dated [date] among [names and addresses] (Creditors) and [name and address] (Debtor).
2. Purpose of Agreement. Debtor owes Creditors various sums that Debtor, because of business reverses, is unable to pay in full. Creditors prefer not to institute insolvency proceedings against Debtor either in a State court or in the U.S. Bankruptcy Court and, therefore, are willing to accept less than the full amount owing to each of them.
3. Compromise of Indebtedness. Creditors agree with each other and with Debtor to accept from Debtor ---------- cents ($----------) for each dollar Debtor owes each of them.
4. Method of Payment. Debtor shall pay each of Creditors the sum set out in Paragraph 3 in the following manner:
a. Cash Payment ---------- percent (----------%) in cash no later than [date].
b. Promissory Notes. The balance in promissory notes dated [date] due on [date] with interest at the rate of ---------- percent (----------%) per annum, payable at the [bank] located at [address]. The notes are to be delivered together with the cash payment provided for in this Paragraph.
5. Creditors Not to Sue or Interfere With Debtor. No Creditor will sue Debtor or proceed against Debtor's property to satisfy any debt owed by Debtor to any Creditor. However, any Creditor may enforce any remedy that Creditor has against Debtor's sureties or guarantors or against any of Debtor's property in which Creditor has a security interest.
6. Events That Would Make This Agreement Void. This Agreement shall be void and of no effect if any of the following events occur:
a. Debtor's Failure to Make Cash Payment. Debtor's failure to make the cash payment by [date], as provided in Paragraph 4(a).
b. Debtor's Failure to Deliver Promissory Notes. Debtor's failure to deliver the promissory notes to Creditors by [date], as provided in Paragraph 4(b).
c. Creditor's Failure to Accept Agreement. The failure of all of Debtor's Creditors to accept and sign this Agreement by [date].
7. Agreement Binding on Representatives, Assigns, Etc. This Agreement is binding upon Debtor's and Creditors' executors, administrators, transferees, and assigns.
8. Controlling Law. This Agreement is governed by the law of [state].