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

A voting plan is a plan that is proposed in a Chapter 11 bankruptcy. It is usually presented in court by the debtor (the person or organization filing for bankruptcy). The voting plan will set out how different classes of creditors should vote on the debtor’s proposed reorganization plan. In Texas, a voting plan must include the treatment of all creditors, the amount and kind of distributions that will be made, the effects of a rejection of the plan, the time within which the plan must be confirmed, and a means of resolving disputes arising out of the plan. The voting plan outlines the negotiated agreement between the debtor and the creditors. It will set out a process for the debtor to win approval of the creditors for the reorganization of the debtor’s financial affairs. It will allow the debtor to pay creditors over time with approved terms and conditions attached to the payments. This can include a reduction of the debt amount or a repayment plan. The voting plan provides the framework for a fair and equitable solution to the debt issues facing the debtor. Creditors can only approve the voting plan if they are given fair and equitable treatment. This means that different classes of creditors must be given equal treatment and that the plan must balance the interests of the debtor and all creditors. If the voting plan passes, the debtor can move forward with reorganization and begin repaying creditors.

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

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