In bankruptcy proceedings, creditors may be willing to take less than the full amount with the hope that the strength of the distressed firm will return in the future; they will then be in a position to receive more of their debt repayment.

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This is a common strategy in bankruptcy proceedings, known as debt restructuring or debt reorganization. Creditors often agree to forgive or reduce some of the debt in exchange for a promise of repayment in the future, when the distressed firm's financial situation improves. This allows the company to continue operating and potentially generate more revenue, while also allowing creditors to recover some of their losses over time.

In Bankruptcy Proceedings, Creditors May Be Willing to Take Less