LML4806 ASSIGNMENT 02 SOLUTIONS 2022
QUESTION 1
Regarding a compromise is, a company is not required to be in financial distress before it may enter
into a compromise per se. According to section 155 a compromise is an agreement or arrangement
or restructuring of claims between a company and its creditors in terms of which the creditors agree
to accept less than their full claims against the company. A compromise is binding on all the
company’s creditors. A company may effect a compromise with its creditors, or a specific class of
creditors, whether the company is in financial distress or not, unless it is in business rescue.
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QUESTION 1
Regarding a compromise is, a company is not required to be in financial distress before it may enter
into a compromise per se. According to section 155 a compromise is an agreement or arrangement
or restructuring of claims between a company and its creditors in terms of which the creditors agree
to accept less than their full claims against the company. A compromise is binding on all the
company’s creditors. A company may effect a compromise with its creditors, or a specific class of
creditors, whether the company is in financial distress or not, unless it is in business rescue.
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