Identify and define the nonbankruptcy compromises between debtors and creditors.
Identify and define the nonbankruptcy compromises between debtors and creditors.
Non-bankruptcy compromises :
There are some compromises available to the parties related to the firms which are going to file bankruptcy. Every party knows once the bankruptcy is imposed by the court and trustee is appointed for liquidation of assets, the parties will get according to the realization of assets and liabilities by trustee. The trustee appointed by the court does not make or intend any compromise between the parties for refunding or realizing the money between them, trustee refunds the money as per the secured status of parties.
So there are some compromises available to the parties to receive there full claim through each other before this bankruptcy process, and often such compromises between debtors and creditors prevents the business firm to go into bankruptcy that's why it is called non-bankruptcy compromises.
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