American Bankruptcy Institute
38 IV. Proposed Recommendations: Commencing the Case
in the case, but the Commissioners believed that this should be the exception rather than the rule. The Commissioners did not want to create roles for third parties in the case or impose additional costs on the process if unnecessary or if the benefits would be marginal at best. Accordingly, the Commission recommended a presumption against the appointment of more than one estate neutral in any given case, which could be rebutted by evidence that the circumstances of the case and a cost-benefit analysis support the additional appointment. The Commission also concluded that, with the elimination of the mandatory appointment provision, if the circumstances of the case warrant the appointment of an estate neutral, the potential benefit of the estate neutral to the estate would likely outweigh any additional costs to the estate. The Commission ultimately voted to provide more flexibility to the court and the parties in using estate neutrals, as set forth in the principles above, and to recommend use of estate neutrals in lieu of examiners.
The Commissioners discussed the related concept of a statutory reorganization executive, which would be similar in some ways to an examiner with expanded powers but different in several key respects. For example, a statutory reorganization executive would likely be suggested and supported by the debtor and could operate the debtor’s business, work directly with the parties to help facilitate a plan, and function more as an insider of the debtor (akin to a chief restructuring officer).139 The Commissioners explored the contours of this new fiduciary, which some Commissioners believed would need to be accountable to the debtor’s board of directors and subject to applicable state fiduciary duty laws. The Commissioners who supported the concept of a statutory reorganization executive viewed it as a private solution that parties would use more readily than seeking the appointment of a trustee or examiner. The Commissioners who opposed the concept of a statutory reorganization executive voiced concerns similar to those noted above respecting an examiner with expanded powers and viewed the appointment of a trustee as the better alternative. Ultimately, the Commission voted against the concept of a statutorily recognized reorganization executive, but did consider the potential value of such a position in considering and developing the parameters of the role of an estate neutral.
4. statutory committees
Recommended Principles:
• Except as provided in the principles for small and medium-sized enterprise cases, the appointment of an unsecured creditors’ committee should remain mandatory as provided under section 1102(a) of the Bankruptcy Code unless the court orders otherwise for cause. The term “cause” should include that such an appointment would not be in the best interests of the estate or that the interests of general unsecured creditors do not need representation in the particular case because, for
139 The Commissioners distinguished a chief restructuring officer from the proposed statutory reorganization executive, as the chief restructuring officer typically is retained as an officer of the company under applicable state law, subject to the same duties and obligations as the debtor’s other officers. The Commissioners found the current process for engaging chief restructuring officers in appropriate cases sufficient and not inconsistent with the Commission’s position on either the estate neutral or the restructuring officer.