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The Unsecured Trade Creditors Committee (UTC) was hard at work once again in 2016. Among other things, the UTC hosted multiple committee-wide conference calls and webinars on wide-ranging topics of interest to its members and ABI members generally, published quarterly newsletters containing articles on hot legal issues, organized panels at both national ABI conferences, and wrote a practice manual that was published by ABI. Once again, the UTC was a multi-channel distributor of knowledge and information to its members, and provided great networking and leadership opportunities.

Competition among law firms to be selected as counsel to an Official Committee of Unsecured Creditor is notoriously stiff.  The financial rewards are substantial and work begets more work.  Every new engagement is another line in the pitch book, and one less for the competition.

By making official committees of creditors mandatory, Congress recognized that committees can be vital to the success of a chapter 11 case.  That is why the United States Trustee Program (“USTP”) expends great effort to solicit and to appoint a “representative” group and to provide its members with a charge that explains their important fiduciary duties to act on behalf of their constituency.  Most committees operate very well and faithfully carry out their fiduciary obligations, thereby benefitting all stakeholders.  Sometimes, however, issues do arise, and the USTP addresse

In chapter 11 cases, the U.S. Trustee’s power is prominently showcased throughout the process of appointing official creditors (and equity) committees. The Code instructs that the U.S. Trustee “shall appoint a committee of creditors holding unsecured claims and may appoint additional committees ... as the United States trustee deems appropriate.”[1] While the U.S. Trustee controls much of the appointment process, bankruptcy courts do retain some statutory authority over the formation and monitoring of committees.

[1]Picture the scene: A vendor has just received word that its customer has filed chapter 11. The vendor put the customer on a cash-before-delivery basis and demanded assurances of performance. The vendor was successful in reducing the accounts receivable owed and avoiding preference liability in doing so.