# Compromise or Arrangement of LLP [Section 60]
## When does S.60 apply?
When a compromise or arrangement is proposed between:
- (a) An LLP and its creditors; or
- (b) An LLP and its partners.
## Step 1 — Application to Tribunal [S.60(1)]
Application may be made by:
- The LLP itself; or
- Any creditor or partner; or
- The Liquidator (if LLP is being wound up).
The Tribunal may order a meeting of creditors / partners to be called, held and conducted as prescribed or as it directs.
## Step 2 — Voting Threshold [S.60(2)]
A majority representing three-fourths (75%) in VALUE of the creditors or partners (as the case may be) at the meeting must agree.
If this threshold is met and the Tribunal sanctions the compromise:
- It is binding on ALL creditors / ALL partners and the LLP itself.
- If LLP is in winding up → binding on the liquidator and contributories.
### Mandatory Disclosure [Proviso to S.60(2)]
No order shall be made unless the Tribunal is satisfied that the applicant has disclosed (by affidavit or otherwise) all material facts, including:
- Latest financial position of the LLP; and
- Pendency of any investigation proceedings.
## Step 3 — Filing with Registrar [S.60(3)]
The Tribunal's order shall be filed by the LLP with the Registrar within 30 days of the order, and shall have effect only after such filing.
## Penalty for Default in Filing [S.60(4)]
| Defaulter | Initial Penalty | Continuing Default | Maximum Cap |
|---|---|---|---|
| LLP | ₹10,000 | ₹100 per day after the first | ₹1,00,000 |
| Every Designated Partner | ₹10,000 | ₹100 per day after the first | ₹50,000 |
## Stay of Proceedings [S.60(5)]
After application is made, the Tribunal may stay the commencement / continuation of any suit or proceeding against the LLP, on such terms as it thinks fit, until the application is finally disposed of.
## Key Takeaway
Three-fourths in value + Tribunal sanction + Filing within 30 days = enforceable compromise binding on all.