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An application is first filed at court, which includes a proposal for how the classes of creditors and members should be defined. Creditors and members may challenge how classes have been composed at the hearing.

If satisfied with the composition of the classes, the court will summon votes to be held. However, no meetings will be necessary for any classes of creditors or members who have no genuine economic interest in the company, i.e. those classes of creditors who are not expected to receive a distribution.

The voting threshold for each class is 75% in value.

After voting takes place, the compromise can be brought back to court for approval, assuming of course that the proposal has been approved by a suitable class of creditors.
If a class has dissented, the court can override the dissent and ‘cram down’ the arrangement, as long as two conditions are satisfied:

• The dissenting class would not be any worse off under the arrangement compared to whatever would most likely happen in the alternative, and;
• 75% of a class which would receive a payment or have a genuine economic interest in the company in the alternative situation have voted in favour of the compromise.

If there was a moratorium in the previous 12 weeks before the application to the court, then the arrangement cannot affect the following creditors without their consent:

• Creditors whose debts arose during moratorium, and
• Creditors who were not subject to the payment holiday during the moratorium
• Such creditors do not participate in the meetings.

The recent reintroduction of preferential status for certain debts owed to HM Revenue & Customs is expected to make the Cross-Class Cram Down a viable option in situations where there is not expected to be a distribution to non-preferential creditors.