Are unsecured creditors free to enforce their rights in each procedure?
Reorganisation proceedings The unsecured creditors’ rights and specific terms for enforcing these rights are governed by the reorganisation plan, which the creditors will have voted on and approved by the requisite majorities. Bankruptcy proceedings The main function of the trustee is to collect and distribute the assets of the company. The liquidator must distribute the assets among the creditors in accordance with a strict hierarchy of priorities (for further detail see question 5.2). Accordingly, unsecured creditors have no freedom to enforce their rights in bankruptcy proceedings and are compelled to wait until the trustee is in the position to make a distribution.
