Giving Unsecured Creditors a Voice: The Benefits of Participating on Creditors’ Committees
"When a debtor files a bankruptcy case, it is not permitted to pay pre-bankruptcy (i.e., prepetition) claims absent court authority, which leaves many of its vendors, landlords and trade creditors with significant unsecured claims and without much insight into the next steps for the bankrupt company. Will the company liquidate? Will the company reorganize with management in place? Will it be sold? Will litigation be pursued? How will preference actions against creditors be handled? Unsecured creditors often seek to serve on the creditors’ committee because it gives them a seat at the table and a unique opportunity to have a meaningful impact on the outcome of the case."
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