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The creditors committee in a Chapter 11 bankruptcy

When a company begins the process of filing for Chapter 11 bankruptcy, there is no doubt that there could very well be quite a few entities that have an interest in how the case is handled. The Chapter 11 bankruptcy process allows a business to craft a plan for how to address debt and how to reorganize to return to profitability. Creditors, in particular, will have a keen interest in seeing that the bankruptcy process is successfully completed.

As a result, a creditors committee can be an important component of a bankruptcy filing. The creditors that will be a part of the committee are appointed by the trustee who is overseeing the bankruptcy process. Typically, the creditors that will be included are the ones that are owed the largest amounts of debt by the company that has filed for bankruptcy.

The creditors committee will participate in a variety of tasks. However, most importantly the creditors will want to coordinate with the company - the debtor in possession - as much as possible. This could mean keeping a close eye on the bankruptcy process in order to ensure that all of the steps are completed on time and successfully. But, it can also include a rigorous investigation of the company's conduct and how the company is operating. And, lastly, the creditors committee will play a key role in the company's planning for a reorganization.

Chapter 11 bankruptcy can be a useful option for companies in Escondido that are facing difficult financial issues. Companies that are considering a bankruptcy filing will want to make sure they have all of the right information about the process, including about the role of the creditors committee.

Source: uscourts.gov, "Chapter 11 - Bankruptcy Basics," Accessed Aug. 21, 2016

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