What Happens If The Proposal Is Rejected By The Creditors?
A Proposal will be rejected by the Creditors if, at the meeting of Creditors to consider the Proposal, more than 1/3 of the Creditors voting by dollar value of claims or more than 50% of the Creditors voting by head-count vote against acceptance of the Proposal. If the Proposal is rejected, the Company is immediately deemed to have filed an Assignment in Bankruptcy and meeting turns into the first meeting of Creditors in the matter of the bankruptcy of the Company. It is common, prior to the meeting of Creditors to consider the Proposal, to meet with major Creditors in order to gauge their votes and understand their concerns. The Debtor Company can, prior to the formal vote, choose to amend the Proposal in order to solicit a higher proportion of acceptance votes.
