A debt settlement and subscription agreement is one which is entered into by a company which wants to settle its debt in the form of offering common stock of the company. When a company is unable to pay the debts in the form of cash this mode of debt settlement can be used provided the creditors accept the same. The option serves best for a company that is in the state of bankruptcy and will not be able to settle the debts from any future cash flows. The details that are necessary in the debt settlement and subscription agreement are the financial statements of the company which includes profit and loss statement, balance sheet and income and expenditure statement along with any accrued receipts if any. The agreement has to be filed with the Securities Exchange along with the above mentioned statements of the company in order to seek approval for debt settlement through issuance of common stock of the company.
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