When a company files Chapter 11, the creditors' committee should determine the likely distribution to unsecured creditors from the standpoint of the liquidation of the debtor's business. The committee should update that analysis if the situation changes. Such an analysis should be made even if liquidation is inadvisable and not considered, since the results of a hypothetical liquidation are an essential factor of both the rights and the bargaining power of the unsecured creditors. It should be noted that a reorganization plan can be confirmed only if it promises unsecured creditors at least as much as they would get from a Chapter 7 liquidation.
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