What is a “voting plan” in a Chapter 11 bankruptcy?

A voting plan is a legal plan of reorganization that is proposed in a Chapter 11 bankruptcy. It outlines how creditors will be compensated for their claims. The voting plan is proposed by the debtor, or the person filing for bankruptcy, and must be approved by the court. It outlines how much money the debtor will pay creditors, how much stock the debtor will issue, and any other strategies for repaying creditors. Once the voting plan is proposed, creditors will vote for or against the plan. To approve the plan, creditors must vote in favor of it by a majority of the dollar amount of claims. If creditors do not approve the plan, the debtor has the option of filing a modified version. If creditors still do not support the plan, the case can be converted to a Chapter 7 bankruptcy, where the assets are liquidated and creditors are paid. The voting plan is important, as it will determine the amount of money the creditors receive. In some cases, creditors may agree to a plan in which they receive less than they are owed in order to receive payments sooner. Once the voting plan is approved by the court, it becomes legally binding and the debtor must make the payments outlined in the plan.

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What is a “voting plan” in a Chapter 11 bankruptcy?

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