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

In a Chapter 11 bankruptcy in Virginia, a creditor’s committee is a group of creditors appointed by the U.S. Trustee to represent the unsecured creditors in the bankruptcy. The committee is typically made up of creditors who were owed the most money prior to the bankruptcy filing. The committee provides a voice for the collective interests of all unsecured creditors, who are often difficult for the court to manage due to the large number of individual creditors. The primary role of the committee is to review the debtor’s proposed repayment plan, which sets forth the amount of money that the debtor will pay back to creditors over time. The committee must approve or reject the plan, and it can also negotiate with the debtor to modify the terms. For example, the committee might ask for a higher percentage of debt to be repaid or request that the repayment period be longer. In addition, the creditors’ committee can also provide oversight and ask the court to require the debtor to provide additional information if needed. This helps to ensure that the debtor is not taking advantage of the bankruptcy process to benefit at the expense of creditors. Finally, the committee can also object to the discharge of any debt owed by the debtor in the case.

Related FAQs

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

Related FAQs

Related Blog Posts