ABSTRACT
Conventional wisdom holds that unsecured creditors’ participation in an insolvency proceeding is important and yet unlikely to occur because creditors face collective action problems and financial hurdles that are likely to discourage this participation.1 This same conventional thinking views creditors’ committees as a solution to the problem of creditor participation, leaving unexamined questions as to why a creditors’ committee is any more likely than a general body of unsecured creditors to overcome inherent disincentives.
