An agreement under which creditors accept partial payment in settlement of their claims is a:
A)subordination.
B)composition.
C)extension.
D)funding.

Question

Quizplus · Accepted Answer

A composition is an agreement between a debtor and creditors whereby the creditors agree to accept a partial payment in settlement of their claims. Subordination is when one creditor agrees to accept a lower priority in repayment than other creditors. Extension is when the debtor is given additional time to repay the debt. Funding is when a company raises capital by selling shares or issuing debt.

An Agreement Under Which Creditors Accept Partial Payment in Settlement