Creditor Committees in Different Bankruptcy Types

Chapter 11 bankruptcy types, reorganization and the creditor committee

When filing this bankruptcy type, a creditors' committee is usually comprised of the seven largest unsecured creditors according to 11 U.S.C. 1102. Also, the United States Trustee appoints the committee. Be careful to distinguish the United States Trustee (a representative of the federal government) from a private case trustee who is normally a private citizen who is paid to perform trustee duties in other cases.

Role of the Creditor's Committee

The committee is authorized to monitor, investigate, and compel compliance of a debtor in possession with applicable chapter 11 bankruptcy laws. In this bankruptcy type, the committee commonly retains private counsel to represent the committee's best interest and require strict compliance. Retaining private counsel must be approved by the court. For more information, see:

Creditor Committees review proposed reorganization plans and presents their recommendations to Courts. Additionally, the manner in which assets are protected and remain available for payment of debts is a primary consideration. If a debtor in possession in this bankruptcy type fails to provide a reasonable plan or protect parties in interest, the debtor's right to remain in possession of the Chapter 11 estate may be terminated by the Court. For more information on bankruptcy types, navigate to the Bankruptcy Types topic.