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Serving on a Creditor's Committee
By Michael C. Dennis, MBA, CBF

Bankruptcy Articles
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In the last twenty-five years, I have served on several creditors' committees, and I learned a great deal from each experience.  There are advantages and disadvantages of agreeing to serve on a creditor's committee.  I will list the items that I consider most important:


  • You have the ability to impact the direction and the outcome of the bankruptcy filing

  • You have access to information about how the debtor got into trouble

  • You have a good idea about whether it is safe to sell the debtor on open account terms 'post petition'

  • If your post petition invoices are 'overlooked' and become past due a call by you to senior management usually results in the oversight being corrected quickly


  • Committee membership involves a significant time commitment over an extended period of time [In my case, the record was a seven year commitment]

  • It sometimes requires out of town or out of state travel

  • Your duty is to act in the best interest of all unsecured creditors.  Theoretically, this means that you might have to recommend action such as pursuing preferences that would be detrimental to your employer

  • Your employer receives the same rate of return whether you participate as a member of the official committee or not

  • You receive no compensation for your work but usually you are reimbursed for travel expenses

  • Any time spent serving on the Committee is time away from your current responsibilities

  • Your employer may not view your participation as beneficial to it

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