Creditors’ Committee Representation
A bankruptcy case is a legal proceeding that allows a company or individual to either dismiss all debts or create a restructured debt repayment plan. Many bankruptcies have hundreds, if not thousands, of creditors. Each of these creditors cannot be represented individually within a bankruptcy and ensure that their rights are protected. Therefore, the U.S. Department of Justice appoints an Official Committee of Unsecured Creditors (creditors’ committee) to have representation within the bankruptcy proceedings.
A creditors’ committee is typically created in a Chapter 11 bankruptcy to ensure that all of the unsecured creditors’ rights are represented in the bankruptcy. However, a creditors’ committee can also be formed in a Chapter 7 bankruptcy, under certain circumstances.
Acting as a single entity, the creditors’ committee has a wide and broad ability to effectively influence and affect the management of the bankruptcy. The role of a creditors’ committee is to maximize the protection of unsecured creditors. Each creditor has its own interest to protect, however, acting as a single entity provides an advantage in the bankruptcy process.
The position of the creditors’ committee can be critical in a Chapter 11 debtor’s ability to obtain Court approval of a reorganization. The Bankruptcy Court and the United States Trustee’s Office will take into consideration the position of the creditors’ committee.
Creditors’ Committee Representation
Oftentimes, a creditors’ committee or individual creditors will enlist the legal resources of an attorney to represent them during the bankruptcy. The professional help requested by the creditors’ committee is paid for by the debtor’s estate and not the creditors themselves. At Goe Forsythe & Hodges LLP, we have experience representing creditors’ committees and protecting the interests of the creditors throughout the bankruptcy.
Representation is offered to both individual creditors and creditors’ committees. We can provide the following services to creditors in a bankruptcy proceeding:
- Create bylaws for the creditors’ committee, if necessary
- Determine if a company should be liquidated immediately
- Help review and ultimately devise a Plan of Reorganization, if applicable
- Negotiate with the debtor or other creditors regarding a reorganization plan, and which debts will be paid, which assets will be sold or retained, and which contracts and/or obligations will be satisfied, dismissed, or altered
- Investigate corporate records of the debtor
- Interview company officers to determine additional facts regarding the bankruptcy
- Monitor the bankruptcy process throughout the case and keep creditors aware of progress within the case
- Handle any potential bankruptcy litigation
- Provide guidance regarding legal responsibilities and fiduciary obligations
Providing representation to a creditors’ committee ensures that legal issues will be addressed and handled promptly and that all creditors’ rights are represented within the bankruptcy.
A Trusted Advisor on Your Side
A creditors’ committee has a fiduciary duty and obligation to all the creditors of the committee. If you are a creditor involved in a creditors’ committee, contact Goe Forsythe & Hodges LLP to understand your rights, and consult with one of our experienced attorneys today regarding representation of creditors’ committees.
Our attorneys can provide guidance to creditors’ committee to act prudently and legally. To find out how our attorneys can help you, contact Goe Forsythe & Hodges LLP at 949.798.2460 or via email today for a consultation.
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