When the debt is prorated to the creditors as a settlement in Chapter 11 this is called:

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The term "composition settlement" refers to the agreement made between a debtor and its creditors in a Chapter 11 bankruptcy case. It involves the proration of the debtor's debts among the creditors, which results in a reduced amount owed by the debtor. This settlement is subject to court approval and can help the debtor avoid liquidation.

When the Debt Is Prorated to the Creditors as a Settlement