Proposal is required for approval of a majority of creditor

Question

What kind of proposal is required for approval of a majority of creditors?

Answer 1

The proposal requires approval of a majority of creditors (who are divided into classes with common interests) who constitute at least two-thirds of the value within that class. If approval is denied, there is a deemed assignment in bankruptcy by the debtor. If the creditors approve, the proposal must be approved by the court, which may withhold approval if the proposal is unreasonable, e.g., creditors are likely to get less than 50 cents on the dollar. Unless the proposal provides otherwise, the debtor retains control of its property, but payments are made to a trustee who distributes monies to the creditors.