The Creditors’ Committee balances the needs of all unsecured creditors. “Balance” means that no one group – certainly not hard-working employees who have already made voluntary concessions – should have to meet an unfair share of the costs of AMR management’s decision to file for bankruptcy. The Creditors Committee is typically made up of the debtor’s largest unsecured creditors. The Committee represents the interests of the Debtor’s unsecured creditors as a whole. The Debtor can hire professional (as we did) lawyers and financial advisers to assist the Committee. The professionals assist the Committee in several key areas:
- Review and analyze the Debtor’s financial records, determining if the Debtor can successfully reorganize.
- Assess how much the Debtor can afford to pay to unsecured creditors through a plan of reorganization.
- Protect the Committee’s interest throughout the process, including representation before the court.
- Police the Debtor – make sure the Debtor operates its business to maximize the return to creditors.
- Drive the case toward reorganization influence and/or control the Debtor’s business decisions with an eye toward eventual payments to unsecured creditors.
- Balance the Secured Creditors power – they can be heard on almost every issue in this case, giving the Committee significant power to negotiate with the various parties in the case.
- Negotiate the terms of a Plan of Reorganization. This is the single most important function of the Committee. The Debtor must have a court approved Plan of Reorganization. This plan is a new agreement that determines how the reorganization entity will treat the creditors.