## Facts

- UNR Industries, Inc. and affiliated entities filed voluntary Chapter 11 petitions on July 29, 1982, facing extensive asbestos-related tort liabilities.
- The bankruptcy court entered an operating order authorizing UNR, as debtor in possession, to continue operating its business under 11 U.S.C. § 1108.
- The U.S. Trustee appointed an Official Trade Creditors’ Committee on August 2, 1982 under 11 U.S.C. § 1102.
- The Committee sought to modify the operating order to give it a substantially expanded, direct role in UNR’s day-to-day operational decisions.
- UNR opposed, arguing § 1103(c)(1) limits the Committee to consultation concerning case administration and that there was no showing of mismanagement or noncooperation.

## Issues

1. Whether 11 U.S.C. § 1103(c)(1) authorizes a creditors’ committee to obtain an order effectively granting it a direct, interventionist role in a debtor in possession’s day-to-day business management.
2. Whether, absent evidence supporting displacement of the debtor in possession (e.g., cause for a trustee), the court may restructure Chapter 11 governance through an operating-order modification that shifts operational control to a committee.

## Decision

- The court denied the Committee’s application to modify the operating order.
- The court held § 1103(c)(1) authorizes consultation with the debtor in possession concerning administration of the case, not participation in daily business management.
- The court found no adequate factual basis (such as refusal to provide information or failure to manage assets) to justify altering the statutory allocation of operational control.
- UNR remained debtor in possession with authority to operate its business, subject to ordinary court supervision and committee oversight functions.

## Legal Principles

- A creditors’ committee’s powers under 11 U.S.C. § 1103(c) are primarily consultative, representative, and investigative; they do not include managing the debtor’s ongoing business operations.
- Chapter 11 presumes the debtor in possession retains operational control under § 1108 unless a trustee (or other statutory substitute) is appointed pursuant to the Code’s specified mechanisms.
- Attempts to create committee “co-management” through an operating order are inconsistent with the Code’s role allocation and cannot substitute for the statutory remedies available when management is inadequate (e.g., seeking appointment of a trustee under § 1104).
- Absent evidence of mismanagement, fraud, or noncooperation warranting statutory relief, the court will not reassign managerial authority from the debtor in possession to a creditors’ committee.

## Conclusion

The bankruptcy court refused to expand a trade creditors’ committee’s role from consultation and oversight into operational control, holding that § 1103(c) does not permit committee co-management of a Chapter 11 debtor and that any displacement of debtor-in-possession control must proceed through the Code’s specific remedial provisions.


In re UNR Indus., Inc., 30 B.R. 609 (Bankr. N.D. Ill. 1983)