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Video instructions and help with filling out and completing Why Form 843 Bankruptcy

Instructions and Help about Why Form 843 Bankruptcy

Welcome to the 5-minute legal master series. Here, expert attorneys help you master important legal topics. Today, board-certified creditors rights and business bankruptcy attorney Kirk B. Berkeley discusses the unsecured creditors committee. Today, we're going to be talking about unsecured creditors committees in bankruptcy proceedings. So, what is an unsecured creditors committee? An unsecured creditors committee is a committee that is formed by the Office of the United States Trustee in most large Chapter 11 bankruptcy cases, as well as some smaller and mid-sized Chapter 11 bankruptcy cases. The committee is chosen from the debtor's largest unsecured creditors. Typically, at the beginning of the case, the debtor will file its list of the largest 20 unsecured creditors, sometimes 30 to 50 largest unsecured creditors. The Office of the United States Trustee will then solicit those creditors to see if they want to participate on the creditors committee. Participation is voluntary. They will form a committee of the three to seven largest creditors that want to participate. They usually try to mix up the creditors to get some differing positions or views of the case on the committee. The committee is charged with representing the interests of all unsecured creditors, not just those creditors on the committee. They look out for the interest of all unsecured creditors for a number of reasons. One reason is to try and get the largest financial recovery as possible. Sometimes, the committee is an ally of the debtor in helping the debtors stay alive and conducting business, so creditors have somebody to continue selling to. Congress decided to create unsecured creditors committees and mandated their creation in Section 1102 of the Bankruptcy Code for a couple of key reasons. One reason is that most other constituencies in the bankruptcy case have a reason to participate...