Composition Agreement
/ˌkɒmpəˈzɪʃən əˈɡriːmənt/
Definitions
- (n.) A legally binding contract between a debtor and creditors specifying terms for debt settlement often involving partial payment.
The parties signed a composition agreement to resolve the debtor's outstanding liabilities at reduced amounts.
- (n.) An agreement in insolvency proceedings whereby creditors agree to accept partial repayment in lieu of full debt recovery.
The court approved the composition agreement as part of the bankruptcy restructuring plan.
Forms
- composition agreement
- composition agreements
Related terms
See also
Commentary
Often used in insolvency law; the agreement must clearly state payment terms and require creditor approval to avoid future disputes.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.