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Bankruptcy Trustee Powers
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Flashcards
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Operating the debtor's business in Chapter 11 reorganization cases
In Chapter 11 cases, the trustee may be tasked with managing the debtor's business during the reorganization process, should the court appoint one.
Making interim distributions to creditors
The trustee may perform interim distributions to creditors when sufficient funds are available, before the case's final resolution.
Evaluating the bankruptcy petition for accuracy
The trustee reviews the debtor's petition and supporting documents to ensure they are complete and accurate, which helps prevent fraud.
Exercising the right of setoff
The trustee can offset mutual debts between the debtor and a creditor, which can result in the reduction of the creditor's claim against the estate.
Determining the dischargeability of debts
The trustee assesses whether certain debts meet the criteria for discharge and may challenge the dischargeability of some debts on behalf of the estate.
Avoiding fraudulent transfers made before bankruptcy
The trustee has the power to reverse transactions where the debtor might have attempted to defraud creditors by hiding assets through transfer.
Advising the bankruptcy court of potential bankruptcy fraud
If the trustee suspects fraudulent activity on the part of the debtor, creditors, or other parties, they must report it to the court.
Serving on committees and working with professionals
Trustees may be required to participate in committees or engage professionals to assist in carrying out their duties, such as accountants or appraisers.
Collecting and liquidating the debtor's non-exempt assets
The trustee is responsible for gathering the debtor's assets that are not protected by exemption laws and converting them to cash for distribution to creditors.
Avoiding preferential transfers made before bankruptcy
The trustee can invalidate certain payments or property transfers made prior to the bankruptcy filing that unfairly benefit one creditor over others.
Implementing the debtor's repayment plan in a Chapter 13 bankruptcy
In Chapter 13 cases, the trustee collects payments from the debtor and distributes them to creditors according to the court-approved repayment plan.
Convening and presiding over the meeting of creditors
The trustee conducts the 341 meeting, allowing creditors to question the debtor under oath about their finances and the information contained in their petition.
Filing the final accounting with the bankruptcy court
The trustee is required to file a detailed report with the bankruptcy court accounting for all property of the estate, claims, and distributions.
Challenging creditors' claims if necessary
The trustee may object to claims from creditors that are improper or excessive, protecting the debtor's estate from being unduly diminished.
Pursuing actions against creditors who violate the automatic stay
The trustee has the authority to address and seek sanctions for violations of the automatic stay, which is designed to protect the debtor from collection activities during bankruptcy.
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