IVA Glossary
C
Composition
When a company is struggling with debts it cannot repay to its creditors, the best solution it will undertake is a company voluntary arrangement. This means that there will be an arrangement between the debtor and the creditor/s upon a repayment schedule which is affordable to the creditor.
A composition is part of such a company voluntary arrangement, and it means that the arrangement takes place strictly between creditors and the debtor. Normally, in order to satisfy all the creditors, the company will not be able to pay very high amounts each month, but will be able to pay back smaller amounts for each of the creditors on a monthly basis.
This might trigger an extending of the term, because by paying less towards each creditor, it automatically will take a much longer period to pay them back in full. The main steps for individuals or companies that wish to take art in a voluntary arrangement are: the application for an interim order, the hearing, the nominee's report, the creditor's meeting, and eventually the approval of a voluntary arrangement.
A composition is part of such a company voluntary arrangement, and it means that the arrangement takes place strictly between creditors and the debtor. Normally, in order to satisfy all the creditors, the company will not be able to pay very high amounts each month, but will be able to pay back smaller amounts for each of the creditors on a monthly basis.
This might trigger an extending of the term, because by paying less towards each creditor, it automatically will take a much longer period to pay them back in full. The main steps for individuals or companies that wish to take art in a voluntary arrangement are: the application for an interim order, the hearing, the nominee's report, the creditor's meeting, and eventually the approval of a voluntary arrangement.
