14.3.2.1.1. The Voting Process
Each creditor that would receive partial payment under the reorganization plan is sent a ballot with a disclosure document. The disclosure document contains a court-approved description of the reorganization plan. Insiders of the debtor company don’t get to vote on the reorganization plan, even if they have claims or interests that would normally entitle them to do so (for example, an executive who is owed compensation).
The plan is deemed accepted by a class of creditors if it is approved by:
• Creditors holding at least two-thirds of the amount of debt in that class
and
• One-half of the number of creditors in the class
Creditors that don’t vote are not counted for purposes of determining whether these thresholds have been reached. If a lot of creditors don’t vote, a small minority of creditors could theoretically accept the plan on behalf of the entire class.
Example: Under Busted, Inc.’s reorganization plan, the class of general unsecured creditors stands to be paid 50¢ on the dollar. This class consists of:
• 110 creditors with claims of $1,000 each
• One credito