Hotline Update – December 7, 2011
In Monday’s Hotline message, we announced the appointment of APFA, APA and TWU (among other entities) to posts on the Committee of Unsecured Creditors’ in AMR’s bankruptcy, and we quoted specific rights and duties of such committees as explained by the U.S. Courts.
During the initial meeting of the Creditors’ Committee formed by the US Trustee, the first order of business is to hire professionals to represent the committee. The law firm of Skadden, Arps, Slate, Meagher & Flom LLP was named to represent the Creditors’ Committee during bankruptcy. Mesirow Financial will be the financial advisors and Moelis & Co., the investment banking company for the Creditors Committee.
Bankruptcy proceedings can admittedly be confusing, particularly because certain terms that aim to be precise, but are uncommon in daily usage, are used by the courts to define the process. One of these terms you will hear quite frequently and which appears in the Creditors’ Committee definition we cited is: “debtor-in-possession.” Member’s have asked us, just what is a “debtor-in-possession?”
To state it simply: AMR is the “debtor-in-possession” in these Chapter 11 bankruptcy proceedings.
The Bankruptcy Code defines “debtor-in-possession” as follows: “debtor-in-possession means debtor except when a person that has qualified under Section 322 of this title is serving as trustee in the case.” Here no trustee has been appointed, so American is the† “debtor-in-possession”.
There are bound to be confusions over the legal meaning of specific terms as the bankruptcy proceedings progress. Please email us at: email@example.com should you have any questions regarding unfamiliar terminology and we’ll do our best to get an answer for you as quickly as possible.