How Voting Works
After the debtor files a plan, creditors in impaired classes are given the opportunity to vote. In Subchapter V, no disclosure statement is required -- the plan itself serves as the solicitation document.
Each impaired class votes separately. A class accepts the plan if:
- Two-thirds in dollar amount of the claims that actually vote are in favor
- More than one-half in number of the claims that actually vote are in favor
Both thresholds must be met for the class to accept. Only claims that actually cast ballots are counted -- non-voting creditors are excluded from the calculation.
Impaired vs. Unimpaired Classes
A class is impaired if the plan modifies any of its legal, equitable, or contractual rights. Common forms of impairment include:
- Reducing the amount owed
- Extending the payment timeline
- Reducing the interest rate
- Converting secured debt to unsecured
A class is unimpaired if the plan leaves all rights unchanged (or cures defaults and reinstates the original terms). Unimpaired classes are conclusively presumed to have accepted the plan -- they do not vote.
Strategic note: If only one class is impaired and that class accepts, the plan qualifies for consensual confirmation under 1191(a) with its broader discharge. Plan classification is therefore a critical strategic decision.
Classification of Claims
The debtor places claims into classes. Each class must contain claims that are "substantially similar" to each other. Common classifications include:
- Secured claims (often one class per secured creditor)
- Priority unsecured claims (taxes, domestic support)
- General unsecured claims
- Equity interests
The debtor cannot "gerrymander" classes to manipulate the vote -- placing friendly creditors in one class and hostile creditors in another to ensure acceptance. Courts scrutinize classification for good faith.
Impact of Voting on Discharge
Voting outcomes directly affect the debtor's discharge:
| Outcome | Confirmation Path | Discharge Timing | Discharge Scope |
|---|---|---|---|
| All impaired classes accept | 1191(a) consensual | Upon confirmation | Broad (standard Ch. 11) |
| Any impaired class rejects | 1191(b) cramdown | After all payments | Narrower -- 523(a) applies |
Critical: A single rejecting class forces the debtor into cramdown, delaying discharge by 3-5 years and narrowing its scope. This makes creditor negotiation essential before the voting deadline.
See also: Consensual confirmation | Cramdown requirements
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