The Unsecured Trade Creditors Committee (UTC) was hard at work once again in 2016.
Committees Committee
Committees
Competition among law firms to be selected as counsel to an Official Committee of Unsecured Creditor is notoriously stiff. The financial rewards are substantial and work begets more work. Every new engagement is another line in the pitch book, and one less for the competition.
By making official committees of creditors mandatory, Congress recognized that committees can be vital to the success of a chapter 11 case. That is why the United States Trustee Program (“USTP”) expends great effort to solicit and to appoint a “representative” group and to provide its members with a charge that explains their important fiduciary duties to act on behalf of their constituency.
In chapter 11 cases, the U.S. Trustee’s power is prominently showcased throughout the process of appointing official creditors (and equity) committees. The Code instructs that the U.S. Trustee “shall appoint a committee of creditors holding unsecured claims and may appoint additional committees ...
[1]Picture the scene: A vendor has just received word that its customer has filed chapter 11. The vendor put the customer on a cash-before-delivery basis and demanded assurances of performance. The vendor was successful in reducing the accounts receivable owed and avoiding preference liability in doing so.
Gas prices have plummeted more than 70 percent in the last two years.[1] This is financially devastating for the oil and gas industry. To cover the “souring energy loans” secured by oil and gas properties and proceeds, U.S. banks have set aside $2.5 billion.
Recently, in Zachary v. Cal. Bank & Trust,[1] the U.S. Court of Appeals for the Ninth Circuit agreed with the Fourth, Fifth, Sixth and Tenth Circuits in holding that the absolute priority rule continues to apply to individual chapter 11 reorganizations, notwithstanding the 2005 BAPCPA amendments to the Bankruptcy Code.
In its January 2016 decision in Boomerang Tube Inc.,[1] Judge Mary F. Walrath of the Delaware Bankruptcy Court considered the U.S.
Fueled by a very active membership, the Unsecured Trade Creditors Committee (UTC) was busy once again in 2015.