Creditor Compromise – Company

A commercial compromise with creditors is an underutilised mechanism available to companies under Part 14 of the Companies Act 1993. This scheme of arrangement is not often used but can be a powerful tool to achieve a compromise with creditors of a company under financial strain.

A compromise works best where the proposal made will result in a higher return to creditors than if the company was liquidated.

A compromise is typically proposed by the board of directors to a class or classes of a company’s creditors and can take many forms. The proposal to creditors can include cancelling all or part of a debt owed by a company or varying the rights of creditors of a company.

Any compromise proposal put to creditors is voted on and to be accepted and binding requires a majority in number and 75% by value in each class of creditors voting on the question.

Should the proposal be accepted by the creditors it then falls to a compromise manager to administer the accepted arrangement.

If you are a director or adviser of a company and believe that a creditors compromise would be beneficial, please contact us for discuss your options further.

 

Other areas in Creditor Compromise: Personal

 

Khov Jones is a specialist insolvency and consulting firm that delivers practical solutions to clients that encounter often challenging and complex issues.

With over 20 years of commercial experience providing specialist advice we have the skills and expertise to provide robust advice to clients when it counts.

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