What is a creditors’ committee?

A creditors’ committee is a group of creditors, usually those with the largest unsecured claims against a debtor, who are selected by the United States Trustee in bankruptcy proceedings. The committee is comprised of the largest unsecured creditors, who must be in agreement with the composition of the committee. In California, the committee is responsible for representing the interests of all unsecured creditors in the bankruptcy case. One of the primary roles of the committee is to review the debtor’s financials and assist the debtor in developing an effective plan for reorganizing the debt. The committee may also investigate and report on any questionable or illegal activities that may have contributed to the debtor’s financial difficulties and propose solutions to address them. The committee also has the authority to approve or reject the debtor’s proposed plan of reorganization. When the debtor’s reorganization is successful, the creditors’ committee plays an important role in ensuring that all creditors receive the payments they are due and that the debtor meets its obligations under the proposed plan of reorganization. When the problems are too complex for the debtor and the creditors to resolve themselves, the creditors’ committee can also hire outside professionals, such as attorneys and accountants, to help the parties reach an agreeable solution.

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What is a creditors’ committee?

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