Who appoints the creditor's committee?

The U.S. trustee appoints the committee in a bankruptcy case.

Can a creditor's committee negotiate with the debtor?

Yes, the committee actively negotiates on behalf of the creditors.

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Creditor’s Committee

What is a Creditor's Committee and Its Importance in Bankruptcy?

Definition & Meaning

A creditor's committee is an official group formed during bankruptcy proceedings to represent the interests of unsecured creditors. Appointed by the U.S. trustee, this committee is reconstituted as needed throughout the case. The primary role of the creditor's committee is to advocate for the diverse concerns of all creditors, ensuring their voices are heard. Unlike a neutral arbiter, the committee actively supports its own interests while assisting in the oversight of the debtor's actions.

Table of content

Legal Use & context

In legal practice, the creditor's committee plays a crucial role in bankruptcy cases, particularly under Chapter 11 of the Bankruptcy Code. This committee engages in negotiations, monitors the debtor's compliance with bankruptcy laws, and can raise issues before the court. Users may find it beneficial to utilize legal templates from US Legal Forms to navigate the complexities of bankruptcy and creditor representation.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

For instance, in a bankruptcy case involving an aerospace company, a creditor's committee may be formed to address the concerns of suppliers and service providers who are owed money. The committee would work to ensure that the debtor's reorganization plan considers the creditors' interests. (Hypothetical example)

Relevant laws & statutes

The primary legal framework governing creditor's committees is found in the U.S. Bankruptcy Code, particularly under Chapter 11. Specific case law, such as In re Parks Jaggers Aerospace Co., illustrates the committee's role and authority in bankruptcy proceedings.

Comparison with related terms

Term	Definition	Key Differences
Creditor's Committee	A group representing unsecured creditors in bankruptcy.	Actively advocates for creditor interests.
Trustee	An individual appointed to manage the bankruptcy estate.	Neutral party overseeing the case, not representing creditors.
Debtor	The individual or entity that owes money to creditors.	Opposing party in bankruptcy proceedings.

Common misunderstandings

What to do if this term applies to you

If you are a creditor involved in a bankruptcy case, consider reaching out to the creditor's committee to express your concerns. You may also explore US Legal Forms for templates that can assist you in understanding your rights and obligations. If the situation is complex, seeking advice from a legal professional is advisable.

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Quick facts

Typical role: Advocate for unsecured creditors.
Jurisdiction: Federal bankruptcy courts.
Appointment: By the U.S. trustee.
Participation: Can raise issues and negotiate with the debtor.

Key takeaways

Frequently asked questions

What is the purpose of a creditor's committee?

The purpose is to represent the interests of unsecured creditors during bankruptcy proceedings.