Temporary Allowance for Voting Purposes
Temporary Allowance for Voting Purposes is the Rule 3018(a) procedure that permits a bankruptcy court to temporarily allow a disputed claim or interest in an amount the court considers proper solely so the holder can vote to accept or reject a Chapter 11 plan.
How it works
A claim objection can otherwise create uncertainty about whether and in what amount a holder may vote. Rule 3018(a)(4) gives the court a targeted solution: after notice and a hearing, the court may temporarily allow the claim or interest for voting. That determination does not necessarily establish final claim allowance for distribution, litigation or other purposes.
Rule 3018(a) solves a timing problem
Plan voting can occur before a complex claim objection can be fully litigated. Temporary allowance lets the court assign a voting amount without delaying confirmation indefinitely.
The procedure requires notice and a hearing
A disputed holder does not automatically choose its own voting amount. The court determines an amount it considers proper for voting.
Temporary allowance is purpose-limited
The Rule speaks specifically to voting to accept or reject a plan. It does not say the temporary amount becomes the final allowed claim for distributions.
The ruling can affect class acceptance materially
A large temporarily allowed claim can change the two-thirds amount threshold and, depending on holder count, the creditor-number threshold.
Worked example: voting power changes without final allowance
A class has $60 million of undisputed voting claims. A disputed $40 million claim is temporarily allowed at $10 million. Voting uses the approved temporary amount while the final claim can later differ.
Timing matters before the Voting Deadline
A holder seeking relief must act early enough for the court to hear the request and for the voting agent to apply the ruling.
Common mistakes
Treating temporary allowance as final adjudication; assuming filing a proof of claim guarantees full voting amount; waiting until after tabulation to raise the issue; and confusing Rule 3018(a) relief with Claim Estimation.
Example
A creditor files a $25 million proof of claim. The debtor objects and asserts the claim should be zero. Before the Voting Deadline, the creditor moves under Rule 3018(a). The court temporarily allows $8 million for voting without deciding the final merits of the $25 million claim.
Example
A creditor files a $25 million proof of claim. The debtor objects and asserts the claim should be zero. Before the Voting Deadline, the creditor moves under Rule 3018(a). The court temporarily allows $8 million for voting without deciding the final merits of the $25 million claim.
Professional note
Keep voting amount and allowed distribution amount separate. Temporary allowance can determine influence in a class vote while the underlying claim litigation continues.
Related terms
- Claim Objection
A Claim Objection is a bankruptcy challenge by a party in interest to the allowance, amount, priority, secured status or other treatment of an asserted claim.
- Allowed Claim
An Allowed Claim is a bankruptcy claim that has been recognized as allowable under the Bankruptcy Code, a confirmed plan or a court order, rather than remaining subject to unresolved objection or disallowance.
- 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.
- Plan Ballot
A Plan Ballot is the written or court-approved electronic voting instrument used by an eligible creditor or equity holder to accept or reject a Chapter 11 plan and, where authorized, make related elections.
Related ROIStreet guides
- What Is the Rule of 55?
The Rule of 55 is an informal name for a federal exception to the 10% additional tax on certain early retirement-plan distributions. It can apply when a worker separates from the employer maintaining a qualified plan in or after the calendar year the worker reaches age 55. This guide explains the age test, eligible plans, IRA differences, taxes, rollovers and special public-safety rules.
- Stocks vs. Bonds: A Practical Comparison
Stocks represent ownership in companies; bonds generally represent lending to an issuer. This comparison explains how the two differ in return sources, volatility, income, maturity, priority, credit risk and liquidity.
- What Is a 401(k) Recordkeeper?
A 401(k) recordkeeper maintains the participant-level ledger: contributions, investments, gains and losses, fees, loans, distributions and account balances. The recordkeeping role is distinct from holding plan assets, writing the plan document or serving as the legal plan administrator, even when one financial company bundles several of those services.
- What Compensation Counts for a 401(k)?
There is no single universal 401(k) compensation number. A plan can use different definitions for deferrals, matching, profit sharing and testing, while statutory definitions govern limits such as Sections 401(a)(17), 414(s) and 415.