(1) Whenever a drainage district is unable to pay its bonds and notes in full, the board may enter into a written compromise agreement with the owners of not less than 70 percent of its obligations. When such agreement has been signed by members of the board and the owners of 70 percent of such obligations, all creditors of the district are subject to such agreement to the same extent as those signing the agreement, and their claims shall be treated in all respects as if they had executed such agreement. (2) Whenever a drainage district is unable to pay its obligations in full, the board may file with the court a petition for an order approving a settlement of claims and directing an equitable distribution of net assets among the creditors of the district. Such petition shall list the available assets of the district, the obligations of the district, the owners of such obligations and their names and addresses or, if unknown, a statement of that fact, and shall state whether a compromise agreement has been executed under sub. (1). If such agreement has been executed, a copy thereof shall be attached to the petition. (3) Upon receiving a petition under sub. (2), the court shall enter an order fixing a time not less than 4 months nor more than 6 months after receipt of the petition within which creditors shall present their claims for examination and allowance. The order shall also fix a time and place for hearing on claims and publication and notice shall be given under s. 88.05 (1) (b) to all creditors of the district whose names and addresses are known. (4) The court shall receive, examine and adjust all claims and demands against the district. At the time set for hearing on claims, any claim may be allowed which is accompanied by a statement of account verified by affidavit and to which no objection is received, except that no claim shall be allowed until the court is satisfied that it is just. (5) The court shall make a statement embracing a list of the claims presented against the district and those presented as a setoff. Such statement shall show how much was allowed and how much disallowed in each case, together with the final balance, whether in favor of the creditor or the district. Such statement shall be filed by the judge and shall stand as the judgment of the court. The court may make an order directing that the available balance of the funds of the district, after costs are paid, be distributed among the district’s creditors as equity requires and discharging the district from further liability on its obligations. (6) All claims against a district which are not filed within the time limited by this section are barred.
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