Opinion ID: 6496837
Heading Depth: 3
Heading Rank: 3

Heading: Analogy to the Creditors’ Committee

Text: We find useful guidance, however, in the jurisprudence surrounding an analogous player in the bankruptcy process: the creditors’ committee. Just as a creditors’ committee exists to serve the interests of its constituents, the various creditors, the FCR serves the interests of his constituents, the future claimants. See Listecki v. Official Comm. of Unsecured Creds., 780 F.3d 731, 739 (7th Cir. 2015) (noting that “a [creditors’] committee represents the larger interests of the unsecured private creditors, and it is to them, and not the Trustee, court, or any governmental actor, that the committee owes a fiduciary duty” and collecting cases). And in the creditors’ committee context, even though the Code only specifies that the committee be “adequate[ly] representat[ive]” of the relevant creditors, 11 U.S.C. § 1102(a)(2), courts have long required each committee member not only to be free of conflicts of interest but also to fulfill fiduciary duties to the committee’s constituents, including duties of undivided loyalty and honesty. See generally 7 COLLIER ON BANKRUPTCY ¶ 1103.05[2] (16th ed. 2021) (summarizing the fiduciary duties of committee members); see also, e.g., Woods v. City Nat. Bank & Tr. Co. of Chi., 312 U.S. 262, 268 (1941) (“Protective committees . . . are fiduciaries.”); In re Kensington Int’l, Ltd., 368 F.3d 289, 315 (3d Cir. 2004) (“[I]t is established that a Creditors Committee 24 owes a fiduciary duty to the unsecured creditors as a whole[.]”); In re PWS Holding Corp., 228 F.3d 224, 246 (3d Cir. 2000) (“Section 1103(c) of the Bankruptcy Code, which grants to the Committee broad authority to formulate a plan and perform ‘such other services as are in the interest of those represented[,]’ . . . has been interpreted to imply . . . a fiduciary duty to committee constituents[.]”). For an FCR, who functions, in effect, as a “creditors’ committee” of one, that fiduciary standard is equally appropriate, so in view of its long-standing application in that similar context and the text of the Code itself, that is the standard we adopt today.