creditors' compositions

A creditors' composition is an agreement between a debtor and their creditors to settle a debt for less than the full amount owed, typically in a structured plan. It often occurs when the debtor is facing financial difficulty but wants to avoid bankruptcy. Through this arrangement, creditors agree to accept a reduced sum or modified repayment terms over a certain period. This process helps the debtor manage their liabilities more effectively while providing creditors with a feasible chance to recover part of what they’re owed, maintaining a more amicable resolution than legal proceedings.