You Want Me to Give a Proxy to Who?

My first job was working for the United States Trustee (“UST”)  for the Southern District of New York. The UST program came about with the amendments to the Bankruptcy Code in 1979. Congress decided that administrative functions – such as appointing examiners, creditors’ committees and trustees – should be performed by an independent party rather than by the presiding Bankruptcy Judge. As a financial analyst and attorney for the UST, we oversaw cases where no one else would have done it, we assured compliance with the  Bankruptcy Code and with the Federal Rules of Bankruptcy Procedure and we made appointments that were in the best  interests of creditors as well as debtors. Congress was smart to implement the UST program.

Representing creditors’ committees in Chapter 11 cases is a big business. There can be a lot of fees earned by attorneys, financial advisors, investment bankers, appraisers, claims agents and disbursing agents representing a creditors’ committee. If creditors do not watch over the fees charged and, as a result there is less money to pay a dividend, the creditors only have themselves to blame.