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2021 Stroock Bankruptcy Guide

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150 can be comprised of the members of a committee that was organized prior to commencement of the bankruptcy case, provided that such committee was fairly chosen and is representative of the different kinds of claims to be represented. 81 11 U.S.C. § 1102(b)(1). On request of a party in interest and after notice and a hearing, the court may order the U.S. Trustee to change the committee's membership if the court determines that a change is necessary to ensure adequate representation. The court may also order the U.S. Trustee to increase the number of members of a committee to include a creditor that is a small business concern 82 if such creditor holds claims (of the kind represented by the committee) the aggregate amount of which, in comparison to the annual gross revenue of that creditor, is disproportionately large. 11 U.S.C. § 1102(a)(4). Similar to a trustee, a creditors' committee performs duties in the administration of the bankrupt estate, including: (i) consulting with the trustee or debtor-in-possession concerning the administration of the case; (ii) investigating the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtor's business and the desirability of the 81 Bankruptcy Rule 2007(b) sets forth certain criteria for determining if such a pre-bankruptcy committee was fairly chosen, including whether (i) it was selected by a majority of unsecured creditors holding allowable, undisputed, fixed, liquidated claims at a meeting of which (a) all creditors holding unsecured claims over $1,000 or the 100 unsecured creditors having the largest claims had at least seven days' notice in writing and (b) written minutes reporting the names of creditors present or represented and voting, and the amounts of their claims, were kept and are available for inspection, (ii) all proxies voted at such meeting were properly solicited and all required data collected with respect to such proxies has been submitted to the U.S. Trustee, and (iii) the organization of the committee was in all other respects fair and proper. 82 The Small Business Act defines a small business concern as "one which is independently owned and operated and which is not dominant in its field of operation." Small Business Act, PUB. L. NO. 85-536 §(3)(a)(1).

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