A creditor compromise is a structured agreement, under the Companies Act 1993, whereby the company directors put forward a proposal to allow the company to continue trading. All creditors must be contacted and a meeting held at which a resolution is proposed to adopt the proposal.
The resolution is adopted if a majority in number and 75% value in each class of creditors voting in person or by proxy or by post, vote in favour of the resolution.
It should be noted that those creditors that do not correctly receive the meeting notice, are not bound by the compromise. They can therefore still take legal action against the company.
It is therefore critical that all of the creditors are identified and correctly notified. 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.
For more information or to discuss your particular situation, call us at 0800 343 343.