Will a Creditors’ Committee Be Appointed in My Bankruptcy Case?

Is your South Florida business currently considering a Chapter 11 bankruptcy filing? You may know that this is one of the most common types of bankruptcy for businesses, from smaller businesses that are structured as partnerships or even sole proprietorships to large corporations. It is also one of the more complex types of bankruptcy, and there are various stages of the bankruptcy process that debtors need to learn more about. As the United States Courts emphasizes, “creditors’ committees can play a major role in Chapter 11 cases.” As such, it is essential to learn more about creditors’ committees and what role they may play in your business’s bankruptcy filing. Our West Palm Beach bankruptcy attorneys can tell you more, and we can begin working with you on your business’s bankruptcy case today.

Defining a Creditors’ Committee

In a Chapter 11 bankruptcy case, the US Bankruptcy Code requires the United States Trustee to appoint a committee of unsecured creditors, known as the creditors’ committee. The United States Trustee must appoint this committee as soon as possible (or practicable), and the point of the committee is to include unsecured creditors’ participation in the Chapter 11 proceedings.

Which creditors are included as part of the creditors’ committee? In general, this committee is made up of individuals who represent the seven largest unsecured claims in the debtor’s bankruptcy case. The creditors who serve on the creditors’ committee are those who are willing to serve; the United States Trustee does not appoint creditors who do not want to or who are not willing to serve. In order for the creditors’ committee to be appointed, there must be at least two creditors who are willing to serve on this committee. Together, the group of unsecured creditors who make up this committee are tasked with representing the interest of all of the unsecured creditors associated with the Chapter 11 filing.

What Can a Creditors’ Committee Do?

If you are filing for Chapter 11 bankruptcy and at least two unsecured creditors are willing to serve on the creditors’ committee, then the committee will likely be appointed by the United States Trustee and will have the ability to perform certain tasks.

What can a creditors’ committee do? It can:

• Participate in the debtor’s reorganization plan development;
• Investigate the debtor; and
• Consult with the debtor about unsecured’ creditors’ issues in the bankruptcy case.

In order to be part of a creditors’ committee, each creditor who has agreed to be a part of the committee must disclose their information and the economic interests they have in the debtor’s case.

Contact Our West Palm Beach Bankruptcy Lawyers for Assistance

Is your business considering a Chapter 11 bankruptcy filing in South Florida? If so, it will be critical to understand the role of the creditors’ committee along with numerous other components in the Chapter 11 bankruptcy process. An experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller can speak with you today to discuss your business’s current financial circumstances and to begin planning your Chapter 11 bankruptcy filing. Contact us for more information about how we serve businesses in bankruptcy cases in South Florida.

Sources:

law.cornell.edu/uscode/text/11

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics