Plan Solicitation
Plan Solicitation is the Chapter 11 process of requesting that eligible holders of impaired claims or interests accept or reject a proposed plan after the disclosure requirements and voting procedures governing that solicitation have been satisfied.
How it works
Section 1125 generally prohibits postpetition solicitation unless the holder receives, at or before solicitation, the plan or a summary and a court-approved disclosure statement containing adequate information. Rule 3017 governs the post-approval transmission of disclosure materials, voting notice and ballots. Prepetition solicitation can be recognized under Sections 1126(b) and 1125(g) when applicable requirements are satisfied.
Section 1125 controls postpetition solicitation
After commencement, the plan proponent generally cannot solicit acceptance or rejection unless the required plan information and court-approved disclosure statement have been transmitted.
Solicitation follows disclosure approval in ordinary cases
Rule 3017 requires court approval of the disclosure statement before the ordinary voting package is sent.
Only eligible voting holders receive ballots
Unimpaired classes are presumed to accept and generally do not vote. Classes receiving no property on account of their claims or interests are deemed not to accept.
Prepetition solicitation follows a different route
Sections 1126(b) and 1125(g) can preserve qualifying votes obtained before bankruptcy when the applicable disclosure rules are satisfied.
Worked example: compliant postpetition sequence
The court approves a disclosure statement June 1. Solicitation packages go out June 5 and ballots are due July 1. The proponent seeks confirmation in July. The sequence ties disclosure, solicitation, voting and confirmation together.
Why defective solicitation matters
A vote is not valuable merely because a creditor signed a ballot. The court can disregard votes obtained through procedures that fail the Code or applicable rules.
Common mistakes
Treating informal restructuring negotiations as automatically equivalent to formal solicitation; sending ballots before required approval; soliciting unimpaired classes unnecessarily; and assuming prepetition votes are always valid after filing.
Example
A debtor obtains disclosure-statement approval, mails the approved disclosure statement, plan, voting instructions and ballots to impaired voting classes, and sets a court-approved Voting Deadline. That package and outreach constitute the formal Plan Solicitation process.
Example
A debtor obtains disclosure-statement approval, mails the approved disclosure statement, plan, voting instructions and ballots to impaired voting classes, and sets a court-approved Voting Deadline. That package and outreach constitute the formal Plan Solicitation process.
Professional note
Distinguish ordinary stakeholder communications from solicitation of plan acceptances or rejections. The legal boundary can matter because premature or defective solicitation can jeopardize use of the votes.
Related terms
- Disclosure Statement
A Disclosure Statement is the Chapter 11 document that provides creditors and other voting stakeholders with information about the debtor, proposed plan, risks, recoveries and restructuring terms sufficient to satisfy the Bankruptcy Code's disclosure requirements for plan solicitation.
- Plan of Reorganization
A Plan of Reorganization is the Chapter 11 plan that sets the classification and treatment of claims and interests and establishes the transactions, distributions, governance and other steps through which the debtor will reorganize or otherwise resolve the bankruptcy case.
- Class Acceptance
Class Acceptance is the Chapter 11 voting determination under Section 1126 that establishes whether a class of claims or interests has accepted a proposed plan based on the votes actually cast by eligible holders.
- Vote Designation
Vote Designation is the Section 1126(e) remedy allowing a bankruptcy court, after notice and a hearing, to disregard an entity’s plan acceptance or rejection when the vote was not in good faith or was not solicited or procured in good faith or in accordance with the Bankruptcy Code.
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