An ad hoc committee is an informal group of holders of the same or similar economic interests. The holders organize to achieve the benefits of collective action, such as strength through size and shared costs. Ad hoc committees are most prevalent in the distressed and bankruptcy arenas and may be unfamiliar to practitioners without experience in these fields. As such, this article provides an introduction to ad hoc committees, including insights into their benefits and operations and also provides an overview of certain legal considerations unique to such committees.
Overview
Ad hoc committees are a “loose affiliation” of similarly situated stakeholders that jointly retain counsel to take collective action.1 The stakeholders may hold, as examples, the same or similar stocks, bonds, bank debt, trust certificates, or even litigation claims.2 Ad hoc committees usually are not formal business entities; they seldom incorporate or otherwise officially organize. Unlike official committees in bankruptcy cases, ad hoc committees are not contemplated in the Bankruptcy Code and are not appointed by a judge or governmental body. Moreover, unlike official committees in bankruptcies, ad hoc committees are not fiduciaries; they act for themselves and have no obligation to protect non-committee members.3
Benefits
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