Creditors vote on the proposal in person or by mail at a creditors' meeting, held approximately three weeks after the proposal is filed. The trustee must file a report to the creditors on the affairs of the debtor and causes of the financial difficulties.
The trustee must also present to the creditors his estimate of what the creditors would realize under a bankruptcy, as compared with the amount they are being offered under the proposal. In order for the proposal to be justified, the creditors must be better off under the proposal than they would be under a bankruptcy.
The proposal must receive approval by at least 66.6% (2/3) in dollars, and 50% plus one in number of eligible creditors who vote, and the proposal must be approved by the court. If the proposal is accepted by the creditors and approved by the court then all unsecured creditors are bound by the proposal, not just the creditors who voted in favor of the proposal.
If the proposal does not receive the required votes, the debtor is immediately bankrupt effective the date of the creditors' meeting.