Personal Compromises

A Personal Compromise is an alternative to bankruptcy. It is governed by Part 5 of the Insolvency Act 2006. People that enter into a personal compromise rather then bankruptcy usually have a commercial and economic reason for doing so.


When a person enters into a personal compromise, a Provisional Trustee is appointed to manage the affairs of that individual. The Court is also notified of the compromise. A compromise is then put together and is put to the creditors for their consideration. A creditors meeting is held and if the creditors accept the compromise, the compromise is then put to the Court for the approval of the Judge.

Personal Guarantees

All of the individuals personal guarantees (whether called up or not) are also creditors in the compromise. This is particularly important as people often assume that parties are not creditors because their personal guarantee is not currently being pursued.

Requirement To Pass

Once the compromise is put to the creditors for consideration, the creditors must vote to approve the compromise. For this to happen there must be a majority in number and 75% in value of the creditors voting either in person, proxy or postal vote.

Phases of Personal Compromise

1. Appointment of a Provisonal Trustee
The Individual appoints a Provisional Trustee to manage their affairs and the Court is notified that a compromise is being put forward.

2. Compromise to Creditors
The Provisonal Trustee prepares the compromise and distributes to all the creditors.

3. Creditors Meeting
A creditors meeting is called and the compromise is voted on.

4. Approval by the Court
Once the compromise is approved by the creditors, it is then put before the Court for its approval. The Court is also asked to confirm the Provisional Trustee.

5. Distribution Under Compromise
The trustee then makes the distributions to the creditors as per the compromise.

Why Personal Compromise?

It is an alternative to bankruptcy and particularly important for individuals who wish to continue to have a presence in the commercial world. The personal compromise process is private and out of the public eye (to a certain extent).

If you would like to find out more or are considering a personal compromise, contact us today.