Compromise, under the Companies Act and the common law

Compromise is a legal instrument that is aimed at creating a situation where creditors are paid less than the full amount due to them, and that payment is made in full and final settlement of their claims.
A creditor would usually be persuaded to accept a compromise if the value of the compromised debt is more than the dividend the creditor would receive it the business were to go insolvent.
Usually, creditors must agree the compromise before it can take effect, but the Companies Act makes provision of a court to make an order approving the compromise under certain circumstances, where 75% in value of the creditors have accepted the proposed compromise.

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