Date of this Version
American Bankruptcy Institute Journal 30:1 (Feb 2011).
Dynamic tension is often used to connote two or more conflicting priorities that may influence decision-making. In the business-restructuring context, it has been used to describe the relationship among debtors and their various stakeholders, including secured creditors, unsecured creditors and shareholders. Each party potentially has a unique and competing agenda regarding the debtor's restructuring plan. Although competing agendas can lead to conflict, this can also encourage parties to reevaluate alternatives and explore different or innovative ways to create value.
This potentially productive role of dynamic tension in restructuring negotiations arguably underlies the committee structure incorporated into the U.S. Bankruptcy Code. In fact, the legislative history of § 1102 of the Code suggests that Congress anticipated a multiple-committee structure in many cases. Nevertheless, this structure has not emerged as a dominant or even preferred option, given, among other things, concerns regarding costs, efficiency and stakeholder interest in serving on committees.