1E9Ct5D

or the administrator after the insolvency proceeding is opened. Creditors may notpropose an insolvency plan. Creditors may, however, instruct the insolvencyadministrator to propose a plan.The insolvency plan may be a plan of liquidation, through which the company’sassets are liquidated and the proceeds distributed to creditors. If the company’sbusiness has greater value as a going concern, the plan may be a transfer plan thatprovides for the sale of all or part of the business to a new legal entity. Alternatively,the plan may be a rehabilitation plan, under which the company is reorganized anddischarged from all or part of its debts.The insolvency plan must be approved by a vote of the creditors and theshareholders. The creditors and shareholders are divided into different groups –such as employees, suppliers, senior secured lenders, or junior secured lenders –according to their type of claim or stake. The plan will almost certainly provide fordifferent treatment among different groups of creditors, but it must provide for equaltreatment of all members within one group.The plan is presented to creditors at a creditors’ meeting. The creditors vote on theadoption of the plan. In order for the plan to be adopted, the plan must receive theaffirmative vote of at least one-half of the number of creditors holding the claims inthat group. In addition, the sum of the claims held by those creditors voting in favorof the plan must exceed one-half of the total of all claims in the group. Even if agroup of creditors fails to vote for the plan, the Court may approve the plan if theCourt concludes that the plan does not worsen the position of thos creditorscompared to their situation in the absence of an insolvency plan, and if the planprovides them with a reasonable economical share of the assets that are to bedistributed on the basis of the insolvency plan. This “cram down” rule also applies to33