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

A “voting plan” in a Chapter 11 bankruptcy is an agreement among the creditors, debtor, and any other interested parties, such as shareholders. It is a plan of reorganization that must be approved by a majority of participating creditors in order for the debtor to obtain court approval. Voting plans contain details such as how much debt each creditor must accept in exchange for their claims, when the debt will be paid, what assets will be used to pay creditors, and how existing equity or new equity will be handled. In South Carolina, voting plans are administered and overseen by the Bankruptcy Court. Once the voting plan is approved, all creditors must comply with the terms set out in the plan. This enables the debtor to reduce or restructure its debts and liabilities, freeing up resources to satisfy creditors without liquidating assets. The voting plan also allows the debtor to pay creditors over time, or in a lump sum, and to modify secured debts. Voting plans are an important tool in a Chapter 11 bankruptcy, as they provide creditors with assurances that their claims will be taken seriously and that their repayment will be managed according to an agreed-upon plan.

Related FAQs

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

Related FAQs

Related Blog Posts