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

A “voting plan” in a Chapter 11 Bankruptcy Law is a proposed plan of reorganization that is usually filed by the debtor (the business that is going through the bankruptcy). The voting plan outlines the terms of the reorganization, such as how much debt the business will repay, how much equity (ownership) the creditors will receive, and other details. The voting plan is submitted to the bankruptcy court, who will then have to approve it. The court will also send the voting plan out to the creditors, who will then vote on the plan. The creditors can either accept or reject the plan. If the majority of creditors accept the plan, then the court will confirm the plan and it will become the law governing the reorganization of the company. If the creditors reject the plan, then the debtor may be required to make changes to the plan before the court will approve it. The debtor can also request that the court confirm the plan without the approval of the creditors, but this is rare. The court will look at the terms of the voting plan to see that it is fair and equitable to all parties, meaning that it does not unfairly favor the interests of any particular creditor. Once the voting plan is approved, the debtor can begin to reorganize their business and repay their creditors in accordance with the plan. The plan also provides a timeline for when the debtor must make the payments.

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

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