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Unsecured Creditors Committees

Serving on a committee may be the most cost-effective way for an unsecured creditor to influence the outcome of a Chapter 11 case and protect its interests. When we represent Unsecured Creditors Committees, we bring the experience, acumen, and nuance developed over decades of working with companies in financial distress. While the goal is always the same – maximizing return to unsecured creditors – we know that success depends on a thorough understanding of the debtor’s business, resources, limitations, and realistic options. An active and well-represented committee can be the lynchpin to achieving the best outcome, whether that involves reorganization, going-concern sale, or liquidation.


Shortly after the filing of any significant Chapter 11 case, the U.S. Trustee (part of the U.S. Department of Justice tasked with overseeing the bankruptcy system) will send solicitation letters to the holders of the largest unsecured claims seeking interest in serving on an official committee of unsecured creditors. Once selected, the Committee can engage legal counsel and financial advisors to assist it in carrying out its duties. Because the fees for these professionals are paid by the Chapter 11 debtor’s estate, membership on the Committee is usually the most cost-effective way for an unsecured creditor to influence the outcome of a bankruptcy case and protect its interests. The Committee has standing to be heard on any issue in the bankruptcy case, and its views tend to be taken seriously by the court.


Of course, along with the benefits of membership, there come certain responsibilities. The Committee is charged with monitoring and scrutinizing the debtor’s Chapter 11 process from start to finish. These obligations are typically fulfilled through regularly scheduled conference calls. Committee members owe fiduciary duties to all unsecured creditors, not just their own company or creditors with similar interests.


While every Chapter 11 case is unique, the following are essential responsibilities for Committee members and Committee counsel in any Chapter 11 case:  


  • Advocate for the unsecured creditor class to maximize recovery

  • Consult with the debtor concerning the administration of the estate

  • Investigate the acts, conduct, assets, liabilities and financial condition of the debtor and examine the operation of its business

  • Investigate the validity, priority and extent of liens secured by the debtor’s property and challenge the status of secured creditors where cause exists

  • Participate in the formulation of a plan of reorganization

  • Perform any and all services that are in the best interests of unsecured creditors

  • Efficiently carry out the Committee’s duties while respecting members' valuable time

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