An instalment plan is a common issuer response to an unpaid issue. It can lead to gradual recovery — or spread the same risk over a longer period. The difference lies in the content of the agreement.
When it makes sense
Mainly where the issuer demonstrably generates income and the instalments are sized accordingly.
It does not make sense as a repeated deferral tool with no performance between successive agreements.
What the agreement should contain
The minimum content; without it the document is closer to a promise.
- precise identification of the claim and its amount
- an instalment schedule with amounts and dates
- consequences of default, including acceleration of the balance
- any security or guarantee
- signature of an authorised person and a date
Risks to keep in mind
An agreement can change your legal position. Whether and how follows from its wording and the original documentation — hence the need for legal review.
Watch for clauses waiving claims or limiting the holder's future steps.
The alternative
If you do not want to carry the risk of another default, compare the instalment plan against a one-off settlement of the claim.
Both can be assessed side by side using the same documents.
Before signing an instalment agreement, have the one-off settlement alternative for your issue assessed.
This text is general information for bondholders. It is not legal advice and not an investment recommendation. Capital Investing Ventures a.s. is not a law firm. Any individual assessment depends on the specific documentation and circumstances of the case.