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

In Minnesota, a Creditor’s Committee is a formal entity that consists of creditors who are part of a Chapter 11 bankruptcy. The purpose of the Creditor’s Committee is to help the bankruptcy debtor with its reorganization by representing the interests of all creditors. A creditor who is eligible for this type of committee may be an unsecured creditor, an equity security holder, a creditor with an allowed claim in excess of $11,725, or any other creditor as appointed by the court. The Creditor’s Committee typically makes decisions regarding the repayment of creditors’ claims, the assumption or rejection of executory contracts, the sale of assets, and the review of the debtor’s proposed plan of reorganization. The Creditor’s Committee also assists the court and the debtor in evaluating the financial condition of the debtor, determining which claims should be paid and in what order, and determining the feasibility of the debtor’s proposed plan of reorganization. In Chapter 11 bankruptcy proceedings, the Creditor’s Committee is appointed at the outset and is usually comprised of the three largest unsecured creditors of the debtor. The Creditor’s Committee is typically chaired by an attorney or accountant who is appointed by the court and who can provide professional advice to the debtor and the court. The Creditor’s Committee has the authority to hire their own professionals, such as accountants and attorneys, to assist in their duties. The Creditor’s Committee is typically responsible for making decisions regarding the interests of the entire creditor community, not just the Creditor’s Committee members.

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

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