What is a creditor’s committee in a Chapter 11 bankruptcy?

In South Carolina, a creditor’s committee is an important part of the Chapter 11 bankruptcy process. The committee is composed of the bankruptcy debtor’s largest unsecured creditors. These creditors will be appointed by the United States Trustee as soon as the bankruptcy filing is accepted by the court. The creditor’s committee is typically made up of three to seven members who have an equal vote. The primary role of a creditor’s committee is to represent the interests of the unsecured creditors. The committee is responsible for negotiating with the debtor to maximize the recovery of money for the creditors. They may also review the debtor’s debts and financial documents and recommend changes to the court. The creditors’ committee has a unique relationship with the bankruptcy debtor in that they hold some power to influence the outcome of the case. This power comes from their ability to negotiate with the debtor and the U.S. Trustee on behalf of the creditors. By forming a strong relationship between the creditors and the debtor, the creditors’ committee can work to ensure that all parties can come to an agreement on the best way to exit the bankruptcy process.

Related FAQs

What is a creditor’s committee in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts