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TITLE 11–BANKRUPTCY

CHAPTER 11– REORGANIZATION

Sub Chapter – Officers and Administration

Sec. 1102. Creditors' and equity security holders' committees

   (a)(1) Except as provided in paragraph (3), as soon as practicable 
after the order for relief under chapter 11 of this title, the United 
States trustee shall appoint a committee of creditors holding unsecured 
claims and may appoint additional committees of creditors or of equity 
security holders as the United States trustee deems appropriate.
    (2) On request of a party in interest, the court may order the 
appointment of additional committees of creditors or of equity security 
holders if necessary to assure adequate representation of creditors or 
of equity security holders. The United States trustee shall appoint any 
such committee.
    (3) On request of a party in interest in a case in which the debtor 
is a small business and for cause, the court may order that a committee 
of creditors not be appointed.
    (b)(1) A committee of creditors appointed under subsection (a) of 
this section shall ordinarily consist of the persons, willing to serve, 
that hold the seven largest claims against the debtor of the kinds 
represented on such committee, or of the members of a committee 
organized by creditors before the commencement of the case under this 
chapter, if such committee was fairly chosen and is representative of 
the different kinds of claims to be represented.
    (2) A committee of equity security holders appointed under 
subsection (a)(2) of this section shall ordinarily consist of the 
persons, willing to serve, that hold the seven largest amounts of equity 
securities of the debtor of the kinds represented on such committee.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2626; Pub. L. 98-353, title III, 
Sec. 499, July 10, 1984, 98 Stat. 384; Pub. L. 99-554, title II, 
Sec. 221, Oct. 27, 1986, 100 Stat. 3101; Pub. L. 103-394, title II, 
Sec. 217(b), Oct. 22, 1994, 108 Stat. 4127.)


                      Historical and Revision Notes

                         legislative statements

    Section 1102(a) of the House amendment adopts a compromise between 
the House bill and Senate amendment requiring appointment of a committee 
of creditors holding unsecured claims by the court; the alternative of 
creditor committee election is rejected.
    Section 1102(b) of the House amendment represents a compromise 
between the House bill and the Senate amendment by preventing the 
appointment of creditors who are unwilling to serve on a creditors 
committee.


                        senate report no. 95-989

    This section provides for the election and appointment of 
committees. Subsection (c) provides that this section does not apply in 
case of a public company, as to which a trustee, appointed under section 
1104(a) will have responsibility to administer the estate and to 
formulate a plan as provided in section 1106(a).
    There is no need for the election or appointment of committees for 
which the appointment of a trustee is mandatory. In the case of a public 
company there are likely to be several committees, each representing a 
different class of security holders and seeking authority to retain 
accountants, lawyers, and other experts, who will expect to be paid. If 
in the case of a public company creditors or stockholders wish to 
organize committees, they may do so, as authorized under section 
1109(a). Compensation and reimbursement will be allowed for 
contributions to the reorganization pursuant to section 503(b) (3) and 
(4).


                         house report no. 95-595

    This section provides for the appointment of creditors' and equity 
security holders' committees, which will be the primary negotiating 
bodies for the formulation of the plan of reorganization. They will 
represent the various classes of creditors and equity security holders 
from which they are selected. They will also provide supervision of the 
debtor in possession and of the trustee, and will protect their 
constituents' interests.
    Subsection (a) requires the court to appoint at least one committee. 
That committee is to be composed of creditors holding unsecured claims. 
The court is authorized to appoint such additional committees as are 
necessary to assure adequate representation of creditors and equity 
security holders. The provision will be relied upon in cases in which 
the debtor proposes to affect several classes of debt or equity holders 
under the plan, and in which they need representation.
    Subsection (b) contains precatory language directing the court to 
appoint the persons holding the seven largest claims against the debtor 
of the kinds represented on a creditors' committee, or the members of a 
prepetition committee organized by creditors before the order for relief 
under chapter 11. The court may continue prepetition committee members 
only if the committee was fairly chosen and is representative of the 
different kinds of claims to be represented. The court is restricted to 
the appointment of persons in order to exclude governmental holders of 
claims or interests.
    Paragraph (2) of subsection (b) requires similar treatment for 
equity security holders' committees. The seven largest holders are 
normally to be appointed, but the language is only precatory.
    Subsection (c) authorizes the court, on request of a party in 
interest, to change the size or the membership of a creditors' or equity 
security holders' committee if the membership of the committee is not 
representative of the different kinds of claims or interests to be 
represented. This subsection is intended, along with the nonbinding 
nature of subsection (b), to afford the court latitude in appointing a 
committee that is manageable and representative in light of the 
circumstances of the case.


                               Amendments

    1994--Subsec. (a). Pub. L. 103-394 substituted ``Except as provided 
in paragraph (3), as'' for ``As'' in par. (1) and added par. (3).
    1986--Subsec. (a). Pub. L. 99-554, Sec. 221(1), amended subsec. (a) 
generally, substituting ``chapter 11 of this title, the United States 
trustee shall appoint a committee of creditors holding unsecured claims 
and may appoint additional committees of creditors or of equity security 
holders as the United States trustee deems appropriate'' for ``this 
chapter, the court shall appoint a committee of creditors holding 
unsecured claims'' in par. (1) and ``United States trustee'' for 
``court'' in par. (2).
    Subsec. (c). Pub. L. 99-554, Sec. 221(2), struck out subsec. (c) 
which read as follows: ``On request of a party in interest and after 
notice and a hearing, the court may change the membership or the size of 
a committee appointed under subsection (a) of this section if the 
membership of such committee is not representative of the different 
kinds of claims or interests to be represented.''
    1984--Subsec. (b)(1). Pub. L. 98-353 substituted ``commencement of 
the case'' for ``order for relief''.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not 
applicable with respect to cases commenced under this title before Oct. 
22, 1994, see section 702 of Pub. L. 103-394, set out as a note under 
section 101 of this title.


                    Effective Date of 1986 Amendment

    Effective date and applicability of amendment by Pub. L. 99-554 
dependent upon the judicial district involved, see section 302(d), (e) 
of Pub. L. 99-554, set out as a note under section 581 of Title 28, 
Judiciary and Judicial Procedure.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 101, 328, 348, 503, 901, 
1103, 1114 of this title.


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Legal Resource Center: United States Code TITLE 11 Filing Bankruptcy Forms Software