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

A Creditor’s Committee (often referred to as ‘the Committee’) is an essential part of Chapter 11 Bankruptcy law in Virginia. The Committee is made up of unsecured creditors who are appointed by the bankruptcy court and are responsible for representing the collective interests of all of the unsecured creditors in the bankruptcy case. The Committee functions as a “watchdog” of the debtor’s actions, and is tasked with assessing the debtor’s plan of repayment, as well as any proposed modifications to the plan. The Committee may also be responsible for monitoring the debtor’s operations and speaking to the interests of creditors at various hearings and meetings. The main purpose of the Committee is to evaluate the debtor’s case and represent the interests of the creditors in negotiations and court proceedings. The Committee must attend hearings, review documents, and communicate with the debtor and other parties in the case. The Committee will have to decide whether to accept or reject the debtor’s repayment plan. If approved, the Committee can recommend modifications to the plan that would be more beneficial for the creditors. The Committee also reviews the Disclosure Statement and informs the court of its opinion of the plan. Additionally, the Committee can investigate and bring to light any issues related to the case. The Committee has the power to object to motions and can be involved in any decision concerning the bankruptcy. Ultimately, the Committee’s responsibilities are to ensure that creditors get the best possible repayment under the circumstances.

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

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