Creditor Rights In The Reconciliation Process Of Bankruptcy
In a bankruptcy process, not all creditors are considered the same. The Bankruptcy Act provides the privileges for creditors whose rights are secured by the right of mortgage or pledge and also to the creditors which other laws are given the special priorities, such as the employee whose salary has not been paid and also the governments for the tax obligation. Creditors who have no special rights, commonly referred to as concurrent creditors, apply the same rules.
In the process of reconciliation of the bankruptcy case, the rights of creditors are also not given the same. The reconciliation proposal is an agreement between the debtor and its creditors regarding the adjustment of the amount of receivables (submitted by creditors) with the amount proposed by the debtor. In the reconciliation process, the creditors are entitled the right to receive a copy of the proposed reconciliation proposal by the debtor, and have the right to make a written opinion on the reconciliation proposal, entitled the right to attend the creditors meeting of the reconciliation discussion, and entitled the right to have the minutes of the meeting, the right to request a correction of the minutes of meeting, the right to approve or reject the reconciliation proposal.
To achieve the reconciliation, the reconciliation must be approved by the concurrent creditors by voting at the creditors meeting, and must also be approved by the court. As for the separatist creditors and preferent creditors, generally, the reconciliation set forth in the reconciliation proposal does not affect the separatist creditor and preferent creditors, unless such creditor voluntarily agrees to waive or modify their rights. In the reconciliation process, the right to vote for approving the reconciliation proposal is given to the concurrent creditor. Separatist and preferent creditors are not entitled the right to vote, except when they have waived their right to precedence for the sake of the bankruptcy assets before the voting of the reconciliation proposal is conducted (Article 149 of the Bankruptcy Act). Notwithstanding the reconciliation, the Creditors will retain their rights against the guarantors and co-debtors and the rights of the Creditors to assert the goods of third persons may continue to exist as if there was no draft reconciliation. (Article 165 of the Bankruptcy Act).
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