top of page

Guide to the Meeting of Creditors in a Consumer Proposal

Meeting of creditors

Key Takeaways

In a consumer proposal, the meeting of creditors is a necessary step to allow creditors to request more information regarding the debtor and negotiate new terms for the consumer proposal. The Licensed Insolvency Trustee is responsible for calling and chairing the meeting and working with the creditors and debtor to reach agreeable terms for the consumer proposal.

‍In a consumer proposal, the meeting of creditors is a step that often sparks client questions and concerns. This article will clarify what transpires in these meetings during a consumer proposal and clarify the role of a Licensed Insolvency Trustee (LIT) in the process.

Understanding the Consumer Proposal Process

Before diving into the specifics of a creditors' meeting, it's important to understand what is a consumer proposal. A consumer proposal is a legally binding agreement between a debtor and their creditors. It is designed to allow the debtor to repay a portion of their total debt that is more affordable than their current debt payments, which makes it a great alternative to bankruptcy.

Role of a Licensed Insolvency Trustee

A Licensed Insolvency Trustee plays a pivotal role as a Consumer Proposal Administrator in the consumer proposal process. They act as a middleman between the debtor and the creditors, helping negotiate the proposal's terms. They are responsible for collecting and reviewing information from debtors to prepare standard documents for creditors to determine if they will accept the consumer proposal or not. They also handle all communications with the creditors and collect payments from the debtor to pay to the creditors.

What is a Meeting of Creditors?

A meeting of creditors is an event that may occur during the consumer proposal process. It's an opportunity for creditors to discuss the proposal details and potentially request modifications. However, it's not a mandatory step in every proposal. It's called under specific circumstances, which we'll explore in the following section.

When is a Meeting of Creditors Called?

Creditors are given 45 days from the initial filing of a consumer proposal to provide the Licensed Insolvency Trustee with a completed proof of claim form and voting letter for it to be counted toward accepting the proposal. Two scenarios can trigger a creditors' meeting:

  1. If the Official Receiver, representing the Office of the Superintendent of Bankruptcy, requests it; or

  2. If creditors, accounting for more than 25% of the total debt, vote against the consumer proposal and request a meeting of creditors be called.

However, it's rare for the Official Receiver to request a meeting, as it is usually the unsecured creditors who will request a meeting of creditors to be called.

Why Would Creditors Request a Meeting?

The most common reason creditors request a meeting is the creditor's dissatisfaction with the consumer proposal's terms. The meeting provides them a way to voice their concerns and propose modifications. For example, a creditor may think the debtor could afford higher payments for the consumer proposal and will provide a counteroffer to the debtor, starting a negotiation between the two parties.

The 25% Rule and Its Implications

For a meeting of creditors to be called, at least 25% of the dollar value of the creditors must request a meeting. For instance, if four creditors exist:

Bank A owed 20% of all debts;

Bank B owed 30% of all debts;

Bank C owed 40% of all debts; and

Bank D owed 10% of all debts.

The meeting will only be called if Bank B, Bank C or both Bank A and D request it. Creditors representing at least 25 % of the dollar value of claims but request a meeting for it to be called by the Licensed Insolvency Trustee.

Do All Consumer Proposals Have a Creditors' Meeting?

No, a meeting of creditors is usually only called 10% to 15% of the time. Also, in many instances, a consumer proposal may need to be called because more than 25% of creditors requested one; however, more than 50% of dollar value of the creditors accepted the original consumer proposal. In this situation, the Trustee would still have to call and attend the meeting, but there would be no negotiations with creditors. The original consumer proposal would be automatically accepted at the meeting of creditors.

If no meeting is required, the votes to accept or reject the proposal aren't counted, meaning the proposal is automatically accepted. The vote only matters if a meeting of creditors is called, requiring at least 25% of the creditors to request a meeting.

What Happens Once a Meeting of Creditors is Called?

If at least 25% of the creditors request a meeting of creditors, then the Licensed Insolvency Trustee will send out a notice to all known creditors and the debtor about the meeting, which must take place within 21 days from the voting deadline. The Trustee will speak with the debtor and creditors who voted against the proposal and try to get both sides to agree to new terms for the proposal to receive more than 50% of the creditors voting in favour.

Once the terms have been agreed to, the Trustee will prepare an amended consumer proposal for the debtor to sign and provide a copy to the creditors who voted against it. These creditors will then provide an amending voting letter, which will allow the consumer proposal to get approved at the meeting of creditors.

What Happens at the Meeting?

When the meeting of creditors happens, most of the time, a new proposal will have been agreed between the debtor and their creditors. At the meeting, the votes will be recounted since the proposal was amended, and the Trustee will note if the consumer proposal has greater than 50% of the creditors voting in favour of it to be accepted.

Most meetings of creditors happen virtually via conference call or video call. However, because the new terms were reached before the creditors' meeting, no one will likely need to attend the meeting but the Licensed Insolvency Trustee.

What if the Proposal is Rejected?

If the proposal is rejected, then the debtor and their creditors can't agree on suitable terms before the meeting of creditors. While this is not ideal, the debtor could consider other options for paying off their debts, such as debt consolidation, bankruptcy or filing a consumer proposal.


Meeting of creditors doesn't need to be a scary experience or mean your consumer proposal will not be accepted by your creditors. However, it is a necessary step for creditors to receive more information on the debtor and negotiate a higher amount before accepting the terms.

If you are considering a consumer proposal to reduce your debts, the Litvack Group would be happy to have a Free Consultation to discuss your financial circumstances and review your options. Contact us today!



bottom of page