The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:
In many restructurings, the early creation of a creditors' committee (or steering committee) will greatly assist negotiations between the debtor company and its creditors, often resulting in a speedier resolution and better returns to creditors as a whole.
The committee may be formal or informal/ad hoc (see Practice Note: Informal creditors' committee in a restructuring) and is usually formed of creditors within the same class. The committee will last until either a successful restructuring is agreed and implemented, or until the collapse of restructuring negotiations.
There are no statutory rules or best practice guidelines on the creation of committees in a consensual restructuring (unlike formal insolvencies where Statements of Insolvency Practice (SIPs) 15 and 6 apply—see Practice Note: Statements of Insolvency Practice (SIPs)—a quick guide, SIP 15, which provides guidance to insolvency practitioners on reporting and providing information to committees and applies to insolvency appointments starting on or after 1 March 2017, and also this guide which R3 has produced to help creditors understand the role of a committee and their responsibilities if they agree to become members of a committee).
When forming a committee, it is useful to consider the following issues:
rationale for having a committee
role of the committee
composition (ie membership) and types of committee
conflicts of interest
governance and mechanics for day-to-day operations
confidentiality and information sharing
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