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

In Utah, a liquidation plan is approved in a Chapter 11 bankruptcy with a majority vote from creditors. The voting process is known as a “cramdown.” Before the plan is put up for a vote, it must first be reviewed by the bankruptcy court. The court will make sure the plan complies with the Bankruptcy Code and is fair to all creditors. Once the plan is approved by the court, it is sent out for voting by the creditors. Creditors can approve or reject the plan. The plan is considered approved by the majority of creditors if at least two-thirds of the creditors who vote, representing at least two-thirds of the total dollar amount of claims, vote in favor of the plan. Creditors may also reach a compromise that satisfies the needs of all involved parties. Once the plan is approved by the majority of creditors, the court will order the debtor to start making payments in accordance with the approved plan. The debtor must then make the payments on time or risk having the plan dismissed. Once all payments are made in accordance with the plan, the bankruptcy court will confirm the plan and issue the debtor a discharge, which releases them from their debt obligations. The discharge will officially end the bankruptcy proceedings and the debtor can begin rebuilding their financial future.

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

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