Definition
An Official Committee of Equity Security Holders is a group of shareholders formed to represent a larger group of shareholders’ interests in a company’s bankruptcy proceedings.
Official Committee Of Equity Security Holders
What is ‘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.
Explaining ‘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.
Further Reading
- The role of financial economics in securities fraud cases: Applications at the Securities and Exchange Commission – www.jstor.org [PDF]
- Stabilizing large financial institutions with contingent capital certificates – www.elgaronline.com [PDF]
- Good finance, bad economics: an analysis of the fraud-on-the-market theory – www.jstor.org [PDF]
