We often (two or three times a year) come up against an incorrectly constituted committee. Usually, this is down to a timing error at the very start of the process.
When you hold a creditors’ meeting, you occasionally face the requirement to have a committee.
Many of you then hold a meeting of the committee immediately after the creditors’ meeting. The problem with this is that in order for the committee to be validly constituted, and therefore able to pass binding resolutions, you must have received consents to act from a least three members and have issued a certificate of due constitution.
In approximately 50% of the committees we have reviewed, there was some form of fault in the constitution. This means that any resolutions passed by the committee are invalid, usually resulting in fees being drawn without authority.
Before you seek resolutions from a committee, it must be validly constituted. There must be consents from at least three members and the certificate must have been issued. You should therefore approach every meeting with consents for people to sign and a draft certificate to be signed if a committee is formed. It is better to take the potential committee members to lunch while the paperwork is prepared than to risk holding an invalid meeting and losing your fee authority.
