What Does It Mean To Host A Creditors’ Meeting For My Proposal?
Most clients I work with wonder whether they have to actually meet with their creditors, and the look of fear on their faces is oftentimes evident. Fortunately, in most instances, no direct meeting ever takes place, but I always warn clients that the possibility does remain. Below, I will discuss what happens at a creditors’ meeting and what it means for you.
When Is A Meeting Called For A Consumer Proposal?
The Administrator of the proposal is the one required to call a meeting of creditors according to the Bankruptcy & Insolvency Act if:
- the creditors holding at least 25% of the value of debts wish to host a meeting, or
- the government instructs that a meeting is required.
What Is The Purpose Of Asking For A Meeting?
A meeting is the only way that a creditor can make their displeasure known to all those present. Even if a creditor votes against your proposal, it doesn’t count against you unless an official meeting was held. Though creditors may request a meeting, one is only held if the creditor themselves holds at least 25% of the claims owed.
What Happens At A Meeting?
Consumer proposals are very rarely, if ever, the purpose of these scheduled meetings. In truth, most meetings are held if a certain creditor wants to vote against a proposal and have their displeasure noted on record. This means that meetings are usually held to count votes.
The law requires all meetings to be scheduled at least 21 days before the official voting period. This is to ensure that there’s enough room for negotiating the terms of the proposal with the consumer.
Usually, the meetings provide an outlet for creditors to require the consumer to pay a higher amount of money than is set forth in the proposal. The final verdict is in your hands if the meeting is officially scheduled.
You can either;
a) propose a compromise or
b) accept the deal offered by creditors
It is also possible to negotiate a deal before the official meeting date is set. The new proposal is easily carried out with a single sheet of paper and if signed by all parties, it goes straight to the trustee’s office for processing. Fortunately, these steps are easily carried out using phone or email.
Though meetings can actually take place, they very seldom do. In most instances, both parties work together to negotiate better terms for the proposal and it is possible to do all of this without having to gather for an official meeting of the creditors.