Ad Hoc Committee Disclosure Requirements

Collective stakeholder participation in a Chapter 11 case, however, extends beyond membership on committees officially sanctioned by the Bankruptcy Code. Unofficial, or 'ad hoc' committees, have also long played prominent roles in bankruptcy cases. Like official committees of unsecured creditors, shareholders, retirees or other creditor groups, ad hoc committees commonly retain professionals and participate in a Chapter 11 case by filing pleadings, appearing before the bankruptcy court and otherwise seeking to influence the outcome of the reorganization and the ultimate recovery on their claims or interests. By acting collectively, committee members share the costs of participating in a Chapter 11 case and have the ability to wield greater influence than they would if acting alone. The Bankruptcy Code itself acknowledges that unofficial committees can play an important role in a Chapter 11 case by providing in ” 503(b)(3)(D) and (4) that costs, including professional fees, incurred by such committees in making a 'substantial contribution' to the case will be paid by the estate as priority administrative expenses.

The members of an official committee bear fiduciary duties to both the bankruptcy estate and the committee's constituency. Official creditors' committees also have a duty (added to the Bankruptcy Code as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCA)) to provide access to information for their creditor constituents and are obligated to solicit and receive comments from creditors concerning developments in the Chapter 11 case. See 11 U.S.C. ' 1102(b)(3). Any fees and expenses of their professionals must be allowed by the bankruptcy court before being paid by the estate. See 11 U.S.C. ” 503(b)(2), 330 and 331.