Basic Rights

• Creditors have basic rights in any bankruptcy case. They share in any distribution of revenue from the debtor's estate, based on the priority of their claim. Creditors have the right to be heard by the trustee during court meetings and can challenge any bankruptcy plan or discharge of debt. In a Chapter 11 plan, creditors are given the opportunity to participate more fully in the reorganization of the debtor's business than in other types of bankruptcy.
  
  

Process

• There are several things creditors should do to make sure their rights are observed. First, cease all collection once a debtor has filed for bankruptcy. Then file a proof of claim with the U.S. Bankruptcy trustee so your claim will be recognized. Consider whether your claim could be discharged and whether it's secured by debtor assets. Make sure you share information with the trustee and monitor the progress of the debtor's case.
  
  

Creditors Committee

• The U.S. Trustee appoints a creditors committee, which is made up of representatives for the debtor's largest unsecured creditors. The committee stays in direct contact with the debtor, investigates the debtor's business conduct and operations and helps formulate the payment plan. The committee's biggest role, though, is to act as a watchdog to make sure the company is being run properly during reorganization.
  
  

Confirmation

• In Chapter 11, the creditors committee must approve the plan submitted by the debtor and his attorney. Voting rights are divided into classes based on the claims against the debtor. In other words, the votes of the creditors that have secured claims or are owed large amounts of money weigh more in the process than smaller creditors.
  
  

Cram-Down Aspect

• In some cases, an agreement cannot be reached or the creditors committee does not approve the payment plan. In this case, the debtor can attempt to force the creditors to accept an agreement. To do this, the debtor must meet certain statutory tests to compel the bankruptcy trustee to approve the plan without creditor support.