Serving On Chapter 11 Committees While Trading In Debtor’s Securities And Claims

Law360, New York (March 22, 2006, 12:00 AM EST) -- Hedge funds and other investors which invest in equity securities, debt securities (Securities), and other debt obligations (Claims) of companies operating in Chapter 11 proceedings are often presented with the issue of whether to serve on official creditor or equity committees. Funds, particularly those with large holdings in a debtor’s Securities or Claims, often seek the role and influence that serving on official committees provide and willingly take on the fiduciary responsibilities that come with committee membership to gain the influence. Members of committees typically receive...
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