Give and Take; Trying to Find the Right Balance – Michael Dennis, CBF

Give & Take

First and foremost, I am very grateful for the work done by official unsecured Creditors Committees in Chapter 11 bankruptcies.  Having served on two Committees, in my opinion what members of the committee give to the creditor community is far more than they are likely to take from serving on a Committee.

A former student of mine called recently about serving on a Creditors Committee.  She explained that she was asked to serve, and believed joining a Committee would provide her with insights about why some customers file for bankruptcy protection.  Her plan was to use these insights to help her to avoid bad debt write offs in the future.

I responded that I did not recall a time when a Committee that I served focused on what went wrong in the debtor company.  Why?  We were too busy monitoring the debtor’s progress, or commenting on the proposed Plan of Reorganization, and discussing preferential transfers among many other tasks.  I told her that Committee membership requires a significant and lengthy time commitment.  I cautioned her that her own work would probably pile up while she attended offsite meetings or participated in lengthy conference calls with other Committee members and legal counsel.

Recognizing her goal was to become better at spotting customers in financial trouble, I suggested that she consider continuing her professional development by preparing for and taking the CCE Exam as an alternative to serving on the

Michael Dennis, CBF

Committee.  I am not sure whether she took my advice, but I am sure I will find out when she reads this Blog.

What are your thoughts?  Was my advice ‘on the mark’ or way off base?  Comments and constructive criticism is always welcomed.

Michael Dennis’ Covering Credit Commentary. Michael’s website is  www.coveringcredit.com

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.

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