A creditor compromise is a structured agreement, under part XIV of the Companies Act 1993, whereby the company directors put forward a proposal to creditors which would allow the company to continue trading. All creditors must be notified and a meeting held at which a resolution is proposed to adopt the proposal.
The resolution is adopted only if a majority in number and more than 75% in value in each class of creditors voting in person or by proxy or by post, vote in favour of the resolution.
Only creditors that have been properly notified of the meeting are bound by the compromise, if it passed at the meeting. Any creditor not notified can therefore still take legal action against the company.
The proposed compromise must also be fair to all creditors and classes of creditor. If a creditor or class of creditor deem they have been unfairly treated, they can apply to the court to have the compromise ended.
We have experience as supervisors of successful creditor compromises, and work closely with the directors and creditors to achieve the best possible outcome for all parties.
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