Formal creditors' committees in formal insolvencies (administration, liquidation, receivership and bankruptcy)

Formal creditors' committees are often formed in large or complex formal insolvencies and are often consulted by the relevant office holder on key issues as they provide a useful sounding board.

Generally, there will be between three and five members in a committee, usually consisting of the creditors with the largest exposure to the company and so greatest interest in the conduct of the insolvency proceedings. Each member of the committee has one vote and an odd number of committee members is usually chosen to avoid any deadlock on voting. Committee members can usually claim reimbursement for their reasonable expenses in attending creditors' meetings.

Most committees will focus on review and approval of the office holder's fees and remuneration.

If a creditor's claim is