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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:
Pro
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You have the ability to impact the direction and the outcome
of the bankruptcy filing
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You have access to information about how the debtor got into
trouble
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You have a good idea about whether it is safe to sell the debtor
on open account terms 'post petition'
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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
Con
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Committee membership involves a significant time commitment over
an extended period of time [In my case, the record was a seven
year commitment]
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It sometimes requires out of town or out of state travel
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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
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Your employer receives the same rate of return whether you participate
as a member of the official committee or not
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You receive no compensation for your work but usually you are
reimbursed for travel expenses
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Any time spent serving on the Committee is time away from your
current responsibilities
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Your employer may not view your participation as beneficial to
it
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