How is a liquidating plan approved in a Chapter 11 bankruptcy?

In a Chapter 11 bankruptcy, a liquidating plan is approved through a voting process. This process is conducted by creditors, who are those owed money by the business. Each creditor has a certain number of votes, referred to as points, that they can cast. The total number of points available will be determined by the amount of the debt each creditor is owed. Once the voting begins, the creditors will vote on the proposed liquidating plan. If the plan receives a majority of votes, then it is considered approved. However, the creditors do not always have to vote on the same plan. A creditor may propose an alternate plan that allows them to receive a more favorable settlement than the original plan. If this alternate plan is approved by the majority of creditors, then it will be implemented. The creditors may also reject a proposed liquidating plan, in which case the court will review the situation and determine the best course of action to take. This could include ordering the liquidation of assets or authorizing a new plan of reorganization. Once the liquidating plan is approved by both the creditors and the court, the business will be required to follow it. The business must then make payments to the creditors according to the terms of the liquidating plan. Once all payments have been made, the business can be officially discharged from the bankruptcy proceedings.

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How is a liquidating plan approved in a Chapter 11 bankruptcy?

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