How does a creditor’s committee work in a Chapter 11 bankruptcy?

In Chapter 11 Bankruptcy Law in Alaska, a creditor’s committee is a group of unsecured creditors who have been appointed by the court to represent the interests of all unsecured creditors of a debtor in a bankruptcy case. The committee is made up of three to five unsecured creditors who typically are the largest unsecured creditors of a debtor or those creditors with the most interest in the outcome of the bankruptcy case. The primary role of a creditor’s committee is to work with the debtor’s representative to develop a plan of reorganization that will ensure an equitable distribution of the debtor’s assets and liabilities among all creditors. The committee also functions as a watchdog for the creditor’s interests, monitoring the actions of the debtor’s representative and ensuring that the debtor is following the court-approved plan of reorganization. The committee may also be involved in negotiations with the debtor’s representative and other creditors to reach an agreement on the terms of the plan. The committee also provides advice to the court regarding the fairness and reasonableness of any proposed plan of reorganization and may even oppose a plan that it believes is detrimental to the interests of its members or any other creditors. The committee is ultimately responsible for communicating and representing the views of all unsecured creditors in the bankruptcy case.

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How does a creditor’s committee work in a Chapter 11 bankruptcy?

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