A compromise with creditors is an alternative to a formal insolvency process. Creditor compromises can be adopted for a company or an individual.
For a company, the compromise process is an alternative to liquidation or receivership and is governed by Part 14 of the Company Act 1993. Although this process needs to notified to the Registrar of Companies it does not need to be publicly notified and advertised.
For an individual, a compromise is an alternative to bankruptcy. A bankrupt would be prohibited from being a director of a company which could be restrictive to that individual. A compromise for an individual is governed by Part 5 of the Insolvency Act 2006.
If you are a director or individual that believes a creditors compromise would be beneficial as an alternative to a formal insolvency, please contact us to discuss this further.
