Source: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section1102&num=0&edition=prelim
Timestamp: 2019-09-20 07:58:52
Document Index: 122854073

Matched Legal Cases: ['§ 1102', '§1102', '§499', '§221', '§217', '§405', '§4', '§432', '§405', '§405', '§221', '§221']

[USC02] 11 USC 1102: Creditors' and equity security holders' committees
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11 USC 1102: Creditors' and equity security holders' committees Text contains those laws in effect on September 19, 2019
§1102. Creditors' and equity security holders' committees
(a)(1) Except as provided in paragraph (3), as soon as practicable after the order for relief under chapter 11 of this title, the United States trustee shall appoint a committee of creditors holding unsecured claims and may appoint additional committees of creditors or of equity security holders as the United States trustee deems appropriate.
(2) On request of a party in interest, the court may order the appointment of additional committees of creditors or of equity security holders if necessary to assure adequate representation of creditors or of equity security holders. The United States trustee shall appoint any such committee.
(3) Unless the court for cause orders otherwise, a committee of creditors may not be appointed in a small business case or a case under subchapter V of this chapter.
(4) On request of a party in interest and after notice and a hearing, the court may order the United States trustee to change the membership of a committee appointed under this subsection, if the court determines that the change is necessary to ensure adequate representation of creditors or equity security holders. The court may order the United States trustee to increase the number of members of a committee to include a creditor that is a small business concern (as described in section 3(a)(1) of the Small Business Act), if the court determines that the creditor holds claims (of the kind represented by the committee) the aggregate amount of which, in comparison to the annual gross revenue of that creditor, is disproportionately large.
(b)(1) A committee of creditors appointed under subsection (a) of this section shall ordinarily consist of the persons, willing to serve, that hold the seven largest claims against the debtor of the kinds represented on such committee, or of the members of a committee organized by creditors before the commencement of the case under this chapter, if such committee was fairly chosen and is representative of the different kinds of claims to be represented.
(2) A committee of equity security holders appointed under subsection (a)(2) of this section shall ordinarily consist of the persons, willing to serve, that hold the seven largest amounts of equity securities of the debtor of the kinds represented on such committee.
(3) A committee appointed under subsection (a) shall-
(A) provide access to information for creditors who-
(i) hold claims of the kind represented by that committee; and
(ii) are not appointed to the committee;
(B) solicit and receive comments from the creditors described in subparagraph (A); and
(C) be subject to a court order that compels any additional report or disclosure to be made to the creditors described in subparagraph (A).
( Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2626 ; Pub. L. 98–353, title III, §499, July 10, 1984, 98 Stat. 384 ; Pub. L. 99–554, title II, §221, Oct. 27, 1986, 100 Stat. 3101 ; Pub. L. 103–394, title II, §217(b), Oct. 22, 1994, 108 Stat. 4127 ; Pub. L. 109–8, title IV, §§405, 432(b), Apr. 20, 2005, 119 Stat. 105 , 110; Pub. L. 116–54, §4(a)(11), Aug. 23, 2019, 133 Stat. 1086 .)
This section provides for the election and appointment of committees. Subsection (c) provides that this section does not apply in case of a public company, as to which a trustee, appointed under section 1104(a) will have responsibility to administer the estate and to formulate a plan as provided in section 1106(a).
There is no need for the election or appointment of committees for which the appointment of a trustee is mandatory. In the case of a public company there are likely to be several committees, each representing a different class of security holders and seeking authority to retain accountants, lawyers, and other experts, who will expect to be paid. If in the case of a public company creditors or stockholders wish to organize committees, they may do so, as authorized under section 1109(a). Compensation and reimbursement will be allowed for contributions to the reorganization pursuant to section 503(b) (3) and (4).
This section provides for the appointment of creditors' and equity security holders' committees, which will be the primary negotiating bodies for the formulation of the plan of reorganization. They will represent the various classes of creditors and equity security holders from which they are selected. They will also provide supervision of the debtor in possession and of the trustee, and will protect their constituents' interests.
Subsection (b) contains precatory language directing the court to appoint the persons holding the seven largest claims against the debtor of the kinds represented on a creditors' committee, or the members of a prepetition committee organized by creditors before the order for relief under chapter 11. The court may continue prepetition committee members only if the committee was fairly chosen and is representative of the different kinds of claims to be represented. The court is restricted to the appointment of persons in order to exclude governmental holders of claims or interests.
Paragraph (2) of subsection (b) requires similar treatment for equity security holders' committees. The seven largest holders are normally to be appointed, but the language is only precatory.
Subsection (c) authorizes the court, on request of a party in interest, to change the size or the membership of a creditors' or equity security holders' committee if the membership of the committee is not representative of the different kinds of claims or interests to be represented. This subsection is intended, along with the nonbinding nature of subsection (b), to afford the court latitude in appointing a committee that is manageable and representative in light of the circumstances of the case.
Section 3(a)(1) of the Small Business Act, referred to in subsec. (a)(4), is classified to section 632(a)(1) of Title 15, Commerce and Trade.
2019-Subsec. (a)(3). Pub. L. 116–54 added par. (3) and struck out former par. (3) which read as follows: "On request of a party in interest in a case in which the debtor is a small business debtor and for cause, the court may order that a committee of creditors not be appointed."
2005-Subsec. (a)(3). Pub. L. 109–8, §432(b), inserted "debtor" after "small business".
Subsec. (a)(4). Pub. L. 109–8, §405(a), added par. (4).
Subsec. (b)(3). Pub. L. 109–8, §405(b), added par. (3).
1994-Subsec. (a). Pub. L. 103–394 substituted "Except as provided in paragraph (3), as" for "As" in par. (1) and added par. (3).
1986-Subsec. (a). Pub. L. 99–554, §221(1), amended subsec. (a) generally, substituting "chapter 11 of this title, the United States trustee shall appoint a committee of creditors holding unsecured claims and may appoint additional committees of creditors or of equity security holders as the United States trustee deems appropriate" for "this chapter, the court shall appoint a committee of creditors holding unsecured claims" in par. (1) and "United States trustee" for "court" in par. (2).
Subsec. (c). Pub. L. 99–554, §221(2), struck out subsec. (c) which read as follows: "On request of a party in interest and after notice and a hearing, the court may change the membership or the size of a committee appointed under subsection (a) of this section if the membership of such committee is not representative of the different kinds of claims or interests to be represented."
1984-Subsec. (b)(1). Pub. L. 98–353 substituted "commencement of the case" for "order for relief".