This article was first published in the June 2007 issue of Financier Worldwide magazine
Official committees play a critical role in US bankruptcy cases. In a Chapter 11 case, a committee is the US Trustee appointed, court anointed, concerted voice of all creditors within a class. (See 11 U.S.C. § 1102.) Because a committee represents all creditors, the position a committee takes on a motion can influence a court’s decision. Since debtors must seek court approval of their actions by motion or application, predictably, a debtor often seeks committee support before acting and may compromise with the committee to obtain that support. Thus, the committee is key to shaping a reorganisation and committee membership is, therefore, viewed as a coveted opportunity.
