Official Committee Of Equity Security Holders

AAA

DEFINITION of 'Official Committee Of Equity Security Holders'

A small group of the largest shareholders in a company formed to represent all other shareholders during a company's bankruptcy trials. An official committee of equity security holders is typically made up of several of the largest shareholders of a company who stand to have the most to gain or lose during the bankruptcy proceedings, thus would serve as the best proxy for the shareholders as a whole.

INVESTOPEDIA EXPLAINS 'Official Committee Of Equity Security Holders'

During both Chapter 7 and Chapter 11 bankruptcy proceedings, an official committee of equity security holders will have a say in the direction which the bankrupt company will take to appease their stake holders. While the tactics used by the committee will differ from situation to situation, the ultimate goal for the committee members is to minimize their potential losses from their equity ownership stake in the bankrupt firm.

RELATED TERMS
  1. Absolute Priority

    A rule that stipulates the order of payment - creditors before ...
  2. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  3. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  4. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  5. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  6. Bankruptcy Court

    What is bankruptcy court?
Related Articles
  1. Spotting Companies In Financial Distress
    Personal Finance

    Spotting Companies In Financial Distress

  2. Bankruptcy Protection For Your Accounts
    Retirement

    Bankruptcy Protection For Your Accounts

  3. When To Short A Stock
    Active Trading Fundamentals

    When To Short A Stock

  4. An Overview Of Corporate Bankruptcy
    Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center