Sonn Law Group is representing Woodbridge investors at the formation meeting of the creditors committee

The formation meeting of the creditors committee is taking place right now in Delaware. Our firm is representing investors in Woodbridge at the meeting.

woodbridge-group-fraud-complaints The typical chapter 11 bankruptcy often has hundreds, even thousands, of unsecured creditors, many of whom hold claims of relatively modest amounts. A committee is designed to deal with the debtor in a more manageable fashion than the entire body of unsecured creditors could, permitting them to speak in an effective and unified voice and assuring representation of creditors who would otherwise be unable to effectively participate in the bankruptcy because of economic constraints.

The formation of a committee provides substantial benefit to the debtor and the bankruptcy court as it provides for a centralized body to be heard and dealt with. The committee’s chief responsibilities are to act as liaison and watchdog between the debtor and its constituency, the unsecured creditors of the estate, and to ensure an efficient and fair settlement of the debtor’s financial difficulties in compliance with the Bankruptcy Code.

While the primary goal of a committee is to negotiate with the debtor a consensual plan of reorganization, an effective committee must at times be adversarial if it is to fulfill its role:

The creditors’ committee is not merely a conduit through whom the debtor speaks to and negotiates with creditors generally. On the contrary, it is purposely intended to represent the necessarily different interests and concerns of the creditors it represents. It must necessarily be adversarial in a sense, though its relation with the debtor may be supportive and friendly.

There is simply no other entity established by the Code to guard those interests. The committee as the sum of its members is not intended to be merely an arbiter but a partisan which will aid, assist and monitor the debtor pursuant to its own self-interest.

When the drafters of the Bankruptcy Code removed the bankruptcy judge as overseer of a chapter 11 case, they envisioned the committee playing a central role in the reorganization process. Thus, when there is no active committee, no trustee appointed and no direct court supervision, the debtor may operate virtually unchecked.

While membership on the committee often involves months of difficult work by committee members who receive no compensation for their time other than reimbursement of their expenses, membership does confer several key benefits including:

If you invested in Woodbridge and have questions, contact the Sonn Law Group at 1-833-STOCKLAW.