A bankruptcy plan that reduces the amount payable to all creditors is known as a ________ plan.

Question

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A composition plan is a type of bankruptcy plan that reduces the amount payable to all creditors. This plan involves making an offer to all creditors to settle the debts for less than what is owed. The offer must be accepted by a majority of the creditors before it becomes binding. Once accepted, the debtor will make payments to the creditors according to the agreed terms of the composition plan.

A Bankruptcy Plan That Reduces the Amount Payable to All