About First Meeting of Creditors
Under the Bankruptcy Code, the United States Trustee must convene and preside at a meeting of creditors, which is often referred to as the Section 341 meeting. This must occur within a reasonable time after the order for relief in a case. However, the court may order the United States trustee not to convene a meeting of creditors or equity security holders if the debtor has filed a plan for which the debtor solicited acceptances prepetition.
Debtor’s duties at and after the meeting of creditors
The debtor is required to attend the meeting and to submit to examination under oath. The purpose of the meeting is to give creditors and the trustee an opportunity to examine the debtor regarding the debtor’s acts and property, and to address any other matter that may affect the debtor’s right to a discharge or the administration of the bankruptcy estate. An individual chapter 7 debtor shall not retain possession of personal property in which a creditor has a purchase-money security interest unless the debtor, within 45 days after the first meeting of creditors under section 341(a), either enters into a reaffirmation agreement on the creditor’s claim or redeems the property. If the debtor fails to so act, the automatic stay with respect to such property is terminated, the property is no longer property of the estate, and the creditor can take whatever action with respect to the property is permitted by applicable nonbankruptcy law. However, the court, on motion of the trustee, may find that the property is of consequential value or benefit to the estate and order delivery of the property to the trustee.
Chapter 7 Creditors’ Committees
An important purpose of the Section 341 meeting in a Chapter 7 case is the election of a creditors’ committee. A creditors’ committee may consult with the trustee or the United States Trustee in connection with the administration of the estate, make recommendations to the trustee or United States Trustee respecting the performance of the trustee’s duties, and submit questions to the court or the United States Trustee concerning the administration of the estate. Only creditors with undisputed general unsecured claims can join Chapter 7 creditors’ committees.
Chapter 11 Creditors’ Committees
In Chapter 11 cases, creditors’ committees play a prominent role in many cases and the members are selected by the United States Trustee. The committee functions as the representative of creditors who hold allowable, unsecured, nonpriority claims. Governmental entities are generally excluded from participation on Chapter 11 creditors’ committees.