Letter Requesting the Appointment of an Equity Committee

Summary

This template is a letter requesting the appointment of an equity committee. This template includes practical guidance, drafting notes, alternate, and optional clauses. Section 1102 of the Bankruptcy Code provides for the formation of committees of creditors and shareholders in a case under Chapter 11. Section 1102 states that the "United States trustee shall appoint a committee of creditors holding unsecured claims and may appoint additional committees of creditors or of equity security holders as the United States trustee deems appropriate." Thus, the U.S. Trustee is not required to form an equity committee. Shareholders seeking the appointment of an equity committee must affirmatively request its formation. A shareholder generally sends a letter to the U.S. Trustee requesting that the U.S. Trustee solicit shareholders' interest in serving on a formal committee. In fact, certain shareholders may have already formed an informal committee. If that is the case, it is easier for the U.S. Trustee to solicit a sufficient number of shareholders to serve on the committee. The request for the appointment of an equity committee is often met with opposition by the debtor and/or other parties in interest. As a result, the bankruptcy court will often be forced to consider a request to appoint an equity committee. Courts have retained the right to de novo review on a case-by-case basis the question of whether additional official committees are warranted to ensure adequate representation of the interests of creditors and equity holders. For a full listing of key content that provides an overview of important topics when litigating disputes in bankruptcy cases, see Bankruptcy Litigation Resource Kit. For more information on equity committees, see Equity Committees.