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Composition with Creditors - Void Agreements

If one creditor is secretly paid more or given a preference, the other creditors can void the agreement because the law guards against the inequitable treatment of creditors. The preferred creditor cannot enforce or void the agreement. The debtor is entitled to recover payments made to such a creditor on the theory that a debtor is vulnerable to pressure by a creditor who has the power to force the debtor to file bankruptcy by refusing to enter into a composition.

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Composition with Creditors - Void Agreements

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