The Myth of the Vote: Examining Creditor Protections for Survivors in Sex Abuse Bankruptcies

Abstract

Much has been made of the creditor vote as a legitimizing mechanism of Chapter 11 mass tort bankruptcies. Courts and scholars alike point to survivors’ overwhelming approval rates as evidence of fairness and support for bankruptcy as a forum for resolving mass tort liabilities. This Article challenges that narrative. Focusing on non-profit sex abuse bankruptcies, it demonstrates that the Bankruptcy Code’s supposed protections for dissenting creditors—the best-interests test and the absolute priority rule—are functionally meaningless when the debtor is a non-profit. Liquidation analyses are riddled with unreliable assumptions, overinclusion of restricted assets, and refusal to value third-party claims and insurance policies. And because non-profits cannot be forced into liquidation and have no equity holders, the absolute priority rule offers no backstop for dissenting survivors.

Against this backdrop, this Article presents the first comprehensive dataset of voting participation and plan approval rates in sex abuse bankruptcies. It finds participation rates to be extraordinarily high, often approaching 100%, and approval rates similarly high, with most plans receiving over 90% support. Yet interviews with survivors and their attorneys reveal that these figures do not reflect satisfaction with the bankruptcy forum. Rather, high participation stems from survivors’ need for voice, recognition, and solidarity with fellow victims, while high approval rates reflect resignation, fatigue, and the absence of meaningful alternatives. By contrast, the relatively few cases with lower participation rates correlate with debtor misconduct and survivors’ deep dissatisfaction with the Chapter 11 process.

The Article concludes that far from providing procedural protections, the creditor vote in non-profit mass tort bankruptcies is largely illusory. Participation and approval rates should not be misinterpreted as endorsement of either the plan or the forum. Instead, they are best understood as artifacts of survivors’ trauma and lack of alternatives, revealing that the “procedural protections” courts tout are, in this context, a myth.

Details

Publisher:
Stanford University Stanford, California
Citation(s):
  • Lisa Qian, The Myth of the Vote: Examining Creditor Protections for Survivors in Sex Abuse Bankruptcies, 37 Stan. L. & Pol'y Rev. 83 (2026).
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