How Creditors Can Fight a Chapter 11 Bankruptcy
Creditors in a Chapter 11 bankruptcy case can be left out in the cold once the restructuring is complete, especially if they are the low man on the payment totem pole. However, creditors are not without protection in a Chapter 11 filing and with vigilance they can increase their chances of a beneficial debt settlement.
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Instructions
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Creditors Can Fight a Chapter 11 Bankruptcy
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Visit the first day hearings. One the main issues creditors have is that they are too far down the list to see any real debt settlement. First day hearings allow creditors to ask that they be treated differently than the traditional bankruptcy debt hierarchy. They also allow motions for the immediate payment of some debts.
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Contact the Office of the U.S. Trustee. The U.S. Trustee's job is to represent the needs of the creditors throughout the bankruptcy process. The trustee can provide information from court dates and hearings that the creditors may not otherwise receive. These can provide you with insights into fighting for your debt.
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Serve on the committee. The bankruptcy committee is made up of company board members, creditors and court officials. They are tasked with creating the restructuring and debt repayment plans. There is no easier way for a creditor to fight for their piece of the debt pie than by being on the committee.
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Get your proof of claims in by the bar date. The most important action a creditor can do to fight for his debt is to file the proof of claim motions on or before the bar date. These proof of claim forms are the creditor's link to the debtor and without them a creditor cannot assert his claim to any money. You can file a claim late, but only if you are able to prove excusable neglect.
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Pressure the debtor. If a creditor can't be on the committee that restructures the debt, then it is likely their debt will be mostly discharged. If a creditor cannot get a foothold in the bankruptcy process, they will resort to being a thorn in the side. Creditors will vote against the restructuring plan and file motions to delay they case just to pressure the debtor into providing concessions to them.
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References
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