In the majority (but not all) chapter 11 cases, the U.S. trustee may appoint an official committee of unsecured creditors (“Committee”), which hires attorneys (and occasionally other professionals) to monitor and challenge the debtor’s activities. The Committee is typically composed of the largest unsecured creditors, but it has a fiduciary duty to all creditors in the case.
The U.S. Trustee will solicit creditors to serve on the Committee by mailing out a questionnaire to creditors. If interested in serving on a Committee, a creditor should promptly mail back the questionnaire and attend the organizational meeting where the U.S. Trustee interviews and appoints committee members.
There are some advantages and disadvantages to serving on a Committee. Learn more about them in Dealing with Distress For Fun & Profit – Installment #14 – An Introduction to Chapter 11 for Unsecured Creditors: What Every Unsecured Creditor Should Know by Michael A. Brandess and Luke Smith.
Hajar is an associate with Much Shelist in both its Business Transactions Group and its Restructuring & Insolvency Group.