Creditors' committees

Formal creditors' committees

Formal creditors' committees are formed in large or complex formal insolvencies (such as administration, liquidation, bankruptcy and receivership) and are consulted by the relevant office-holder on key issues as they provide a useful sounding board.

The committee cannot interfere with the office-holder’s statutory duties or cause the office-holder to do anything that they consider to be inappropriate.

One of the important functions of a committee is to determine the office-holder's remuneration.

Generally, there will be at least three and not more than five members of a committee, usually consisting of creditors with the largest exposure to the company and so greatest interest in the conduct of the insolvency proceedings.

A creditor is eligible to be a member of such a committee if they have proved for a debt and the debt is not wholly secured. Each member of the committee has one vote and an odd number of committee members is usually chosen to avoid any deadlock on voting.

A person’s membership of a committee is automatically terminated in a number of circumstances,

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