What is the Voting Period for Creditors?

The voting period

Your creditors are entitled to vote for or against the acceptance of your consumer proposal. The Act allows them 45 calendar days from the date when the proposal is filed. Weekends and statutory holidays are not taken into account – a day is a day. For example, if someone files a consumer proposal on June 1, then their creditors have until July 15th to vote for or against the plan.

How are the votes counted?

After the voting period, your trustee counts the votes. The voting procedure prescribed by the Act is not complicated:

  • Every dollar that you owe is entitled to cast a vote. For example, if you owe $20,597 then there may be 20,597 votes cast.
  • In order for a dollar (vote) to count in the total, a creditor must submit a valid Proof of Claim. Votes are not tallied for debts that have not been proven.
  • Acceptance of your proposal by your creditors is “assumed” in any case where the creditor does not actually vote to reject.

In other words, when considering whether or not your proposal has been accepted, we actually look to see how much of your debt has voted against your consumer proposal (voted to reject your offer). In order for your proposal to be accepted, your trustee must not receive a majority of the votes cast against your offer.

This part confuses some people, so let’s try an example.

A simple example

Joe Debtor owes Visa $5,000, MasterCard $7,500, Amex $2,500 and income taxes of $5,000. His total debt is therefore $20,000.

His trustee has received valid proofs of claim from Visa, Mastercard and the Government of Canada. So the total proven claims are: $5,000 + $7,500 + $5,000 = $17,500.

The Government of Canada did not vote for or against Joe’s consumer proposal. Visa voted for it and MasterCard voted against.

Has Joe’s consumer proposal been accepted by his creditors?

To be accepted, Joes’ trustee must not have received a majority of the votes cast against his consumer proposal. The total proven claims are $17,500 (remember, we haven’t received a valid proof of claims from Amex so those dollars aren’t included in our total.

A majority of $17,500 is $8,750.01. The trustee received $7,500 in proven claims voting against acceptance (Mastercard). That number is less than the number required therefore Joe Debtor’s consumer proposal is accepted by his creditors.

Possibility for further voting

If creditors with 25% or more of the proven debts have voted against your proposal during the 45-day period, your trustee will be required to schedule a meeting of creditors. The meeting will be held within 21 days and all of your creditors now have until the meeting of creditors to vote (or change their vote) as they see fit.

For a free consultation on whether a consumer proposal is right for you, contact a Licensed Insolvency Trustee near you.