Consumer proposals get accepted in our office “eventually” at a rate of 95% or better.
This means a combination of acceptance by creditors votes by the initial vote 45 days from the filing of the proposal PLUS acceptance of proposals that are initially rejected
but are accepted after they are negotiated and/or amended (usually by offering more overall payment), within about a couple of weeks after the initial 45 day vote.
This high success rate for acceptance is due to offering proposals that make sense to creditors and including the terms and conditions they commonly want. Creditors know that if the proposal is not eventually approved, the debtor will probably consider bankruptcy in which case the creditors will likely get less than what is offered in the proposal.
Here are some of the issues the Licensed Insolvency Trustee, acting as Administrator of a consumer proposal, needs to prepare in the proposal and support documents in order to provide sufficient information for creditors to vote acceptance;
- a thorough statement of affairs of the debtor describing the debtor’s assets with realistic liquidation values, a list of creditors both unsecured and secured with notes advising what asset is held as security by which creditor, and the debtor’s personal information such as age, employment, employer, marital status, dependents and causes of financial problem, and disclosure of recent transactions.
- an estimated statement of the debtor’s household income and living expenses.
- the consumer proposal which describes how much the debtor is offering and the terms of payment(usually how much per month and for how long).
- an Administrator’s report giving the recommendation and justification of the Administrator for why the creditors should accept the proposal. The justification is commonly a comparison between the proposal offer and an estimate of what creditors could expect in a bankruptcy.
The creditors are relying on the Administrator’s knowledge, investigation and professional integrity in preparing accurate and fair information for the creditors to consider.