Closing the Window: A Proposal to Insure Committee Members Against Fiduciary Duty Claims 

Creditors’ committees serve an important role in chapter 11 bankruptcy cases. Pursuant to the Bankruptcy Code, creditors’ committees are empowered to consult with the debtor in possession about the administration of the case, investigate the debtor’s financial condition and operations, and participate in the plan formulation process. These powers enable the committee to exercise significant oversight over the debtor and to serve as a powerful representative for all general unsecured creditors. In this role, creditors’ committees give general unsecured creditors a voice and visibility in the case, which may not otherwise exist. In addition, creditors’ committees often serve to offset the power and control of secured lenders in bankruptcy cases, and play a significant role in preserving and prosecuting estate causes of action in order to maximize the amount of recovery available for all creditors. All of these functions are essential to the proper resolution of a case under chapter 11.

For the full article or for more information on the Norton Annual Survey of Bankruptcy Law, Volume 2019, visit Thomson Reuters.

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