The U.S. Trustee may appoint another committee to represent a distinct class of creditors, such as secured creditors, employees or subordinated bondholders. After the committees work with the company to develop a plan, the court must find that it legally complies with the Bankruptcy Code before the plan can be implemented. This process is known as plan confirmation. This takes a few months or a few years. The debtor company develops a plan with committees.
Company prepares a disclosure statement and reorganization plan and files it with the court.
SEC reviews the disclosure statement to be sure it's complete. Court confirms the plan, and Company carries out the plan by distributing the securities or payments called for by the plan. Generally, the SEC's role is limited. Although the SEC does not negotiate the economic terms of reorganization plans, we may take a position on important legal issues that will affect the rights of public investors in other bankruptcy cases as well. For example, the SEC may step in if we believe that the company's officers and directors are using the bankruptcy laws to shield themselves from lawsuits for securities fraud.