For those of us who have done committee work, there is a big change in the way business will be done in the future, based on the new changes to the bankruptcy law. Because of a requirement that committee counsel share information provided to the committee by the debtor with all of its constituencies, the ability of committee counsel to "keep secrets" is severely hindered. Think of a case where there may be many, perhaps small, unsecured creditors and the debtor wants to share some information about its future business with the members of a committee and you will see the potential for trouble. Compound that with the fact that debtors often want to get "buy in" from an unsecured committee concerning the future of the business and this should be encouraged, but they do not want to have that plan broadcast to the general public. Finally there are frequently situations where a debtor's competitors are on a list of unsecured creditors. In the past the U.S. Trustee has been able to isolate a competitor from receiving the debtor's sensitive information by making sure that they are not on the committee as a member, but now that method of protecting the debtor's information is no longer viable. Everyone will attempt to address this issue with confidentiality agreements, but those are of limited value, as such contracts can be easily breached by an unscrupulous competitor and then "the cat's out of the bag" and the debtor is left with a lawsuit. Recall that Creditor Committees play an important part in many Chapter 11 cases. They can assist or hinder successful reorganizations and due to their importance are addressed in the Bankruptcy Code. With the Bankruptcy Reform law recently passed, there are some changes to the roles and makeup of Creditor Committees. Here is a summary of changes to Committee rules under Section 1102: ? A court, on request of a party in interest, may order the US Trustee to change the Committee membership, if the court determines that change is necessary to ensure adequate representation of creditors or equity security holders. ? The court may order the US Trustee to increase the number of committee members to include small business concerns if the court determines that the creditor holds claims, which in comparison to the annual gross revenue of the debtor, are disproportionately large. ? A committee appointed under Section 1102 shall: ? Provide access to information for creditors who hold claims of the kind represented by that committee and are not appointed to that committee, ? Solicit and receive comments from the creditors described above, and ? Be subject to a court order that compels any additional report or disclosure to be made to the creditors described above. As noted earlier, this last section is particularly troubling in that information which was often times confidential between the committee and the debtor will now be easily accessed by any creditor, which could include the debtor's competitors. ----Mike