Creditors' Issues: Forbearance Agreements and Settlement Agreements


Creditors and debtors often enter into agreements with respect to the repayment of indebtedness. These forbearance agreements or “standstill agreements” are useful tools whereby both creditors and debtors can work together to reach a common goal without the immediate need for realization of assets in a formal insolvency proceeding.

In contrast, a settlement agreement is designed to bring finality to all or some part of the credit arrangement with the debtor. As such, particular care has to be taken under a settlement agreement to insure that what is being settled and released does not affect other parties or other issues that are not being resolved under the agreement

This paper was prepared for the Continuing Legal Education Society of
British Columbia’s course on Bankruptcy & Insolvency Basics for Lawyers held on February 22, 2011 in Vancouver, BC.