The plan is accompanied by a disclosure statement, the bankruptcy equivalent of a prospectus, containing the valuation the recoveries are built on. Classes vote by dollar amount and by number of holders, and the court confirms the plan if the statutory tests are met, including absolute-priority-rule compliance.
Traders should read the recovery table and the class treatment before anything else. "Impaired, deemed to reject" next to existing equity is the standard phrasing for a wipeout, and it appears long before the shares stop trading.
Example: the plan values the reorganized company at $1.9B, converts $1.2B of notes into 95% of the new equity, gives lenders warrants, and cancels existing common. Confirmation is set for a date eleven weeks out.
Related: chapter-11, absolute-priority-rule, post-reorganization-equity, equity-committee, chapter-7