Demystifying the Creditor Voting Period: An In-depth Guide
When you’re navigating the complex world of consumer proposals, understanding the intricacies of the voting process can be challenging. One of the most frequently asked questions is, “What is the Voting Period for Creditors?”. This article aims to shed light on this topic.
Understanding the Voting Duration
Creditors play a pivotal role in approving your consumer proposal. They are granted a period of 45 calendar days from the proposal’s filing date to cast their vote. It’s important to note that this duration does not exclude weekends or public holidays – a day is simply a day. If a consumer proposal is filed on the 1st of June, creditors are given until the 15th of July to vote.
Vote Counting Mechanism
Once the voting period concludes, the trustee counts the votes. The Act provides a simple voting process:
- Each dollar owed translates into a vote. For instance, if you owe $20,597, there could potentially be 20,597 votes.
- For a vote to count, a creditor must present a valid Proof of Claim. Votes are not counted for unproven debts.
- If a creditor does not vote to reject, it’s assumed they’ve accepted the proposal.
In essence, the focus is on the amount of debt voted against the proposal. To gain approval, your trustee must not receive votes against the proposal that form a majority of the proven debt.
Let’s illustrate this with an example.
A Practical Example
Let’s consider an individual named Joe Debtor, who owes Visa $5,000, MasterCard $7,500, Amex $2,500, and $5,000 in income taxes. This brings his total debt to $20,000.
The trustee has received valid proofs of claim from Visa, Mastercard, and the Government of Canada. Consequently, the total proven claims amount to: $5,000 + $7,500 + $5,000 = $17,500.
The Government of Canada abstained from voting, Visa voted in favor, and MasterCard voted against.
So, has Joe’s consumer proposal gained creditor approval?
For acceptance, the trustee should not receive votes against the proposal that form a majority of the total proven claims. A majority of $17,500 is $8,750.01. The trustee got $7,500 in votes against acceptance (Mastercard), which is less than the required majority. As a result, Joe’s consumer proposal is approved by his creditors.
Further Voting Opportunities
If creditors holding 25% or more of the proven debts vote against your proposal within the 45-day period, your trustee is mandated to arrange a creditors’ meeting. This meeting is set for within 21 days, and all creditors can vote (or change their vote) as they deem fit up until the meeting.
For a no-obligation consultation to ascertain if a consumer proposal is the right solution for you, reach out to a Licensed Insolvency Trustee near you.
By comprehending “What is the Voting Period for Creditors?”, you’re better equipped to navigate the consumer proposal process. This understanding empowers you to make informed decisions that can positively impact your financial future.
Remember, it’s always advisable to seek professional guidance when dealing with complex financial matters. A Licensed Insolvency Trustee can provide valuable insights, guide you through the process, and increase your chances of achieving a favorable outcome.
