The Bankruptcy and Various Laws:
After a person or a company declares itself bankrupt, all
the proceedings afterwards are taken as per the various provisions
of the bankruptcy law. The bankruptcy law is different in different
countries and thus, there are no fixed provisions of law that
are applicable in the different countries. But the course of
action necessarily remains the same in almost all the countries.
A person or the company etc that wishes to declare itself bankrupt
has to first file an application in the court of law. There
are also bankruptcy courts in many countries like the United
States. Once the application for the bankruptcy is filed, all
the proceedings afterwards take place as per law. In almost
all the countries, special persons are appointed that be required
to sell the assets of the debtor so as to realize money and
distribute them among the various creditors of the debtor. These
persons are known as the Bankruptcy
Trustees. Let us discuss these in our next part of discussion.
The Bankruptcy Trustee:
If a person wishes to understand the complete role of the bankruptcy trustees, he has to understand these with respect to the United States as bankruptcy trustees are appointed by the various U.S bankruptcy courts as per the provisions of the Bankruptcy law of U.S.
First of all, the reader should know it the exact definition of the bankruptcy
trustee. A bankruptcy trustee is an official that is appointed
by the court of law and their purpose is to administer the bankruptcy
estate of the debtor. It is to be noted here that the estate
here means all the properties and the other assets that are
non-exempt and thus are attachable. In the United States, it
is the chapter 7 trustee as per the bankruptcy law that can
liquidate the non-exempt property and other assets of the debtor.
The proceeds that are realized by selling the assets are distributed
to the various creditors of the bankrupt person or the company.
It is to be noted here that it is not like that the proceeds
are distributed by the bankruptcy
trustee equally among all the creditors of the bankrupt
person or the company. The various creditors are given priority
on the basis of various provisions of law and then, the proceeds
are distributed accordingly.
Apart from selling the assets, the bankruptcy trustee also
considers the various fraudulent transfers that had been made
and that can be recovered. The proceeds thus recovered are also
distributed among the various creditors of the debtor. Also,
the bankruptcy trustee has the power of discharging the debtor
after the sale of the assets. The remaining assets are returned
to the debtor and once the bankruptcy trustee has closed the
case, he has no right over the remaining assets of the debtor.
But it can also be the case that the bankruptcy trustee moves
a petition for the dismissing the case on the grounds of substantial
abuse. He can also deny the discharge to the debtor if he is
satisfied that the debtor had committed fraud, perjury etc.
In the United States, the bankruptcy trustee is also appointed as per the various provision of the bankruptcy law under the chapter 13 of the United States bankruptcy law. It is to be noted here that any company or a person who wishes to repays all the money to its creditors over the years file the bankruptcy application under the chapter 13 of the United States bankruptcy law. In this case, a repayment plan has to be drawn by the debtor that spreads over the years. The bankruptcy trustee appointed under the chapter 13 reviews this plan of the debtor and if he is satisfies, he gives it a green signal. However, the bankruptcy trustee collects the payments and the proceeds are distributed among the various creditors of the chapter 13 debtor.
Thus, the role of the bankruptcy can be defined as: the bankruptcy trustee is a person who assures the various creditors of the debtor the returns either by selling the assets of the debtor or over a period of time from the collections of the debtor. It can also be said that he acts in the favor of the debtors so that they can get their money back that the lent to the debtor.
Responsibilites of the Bankruptcy Trustee:
There are various responsibilities of the bankruptcy trustee that has to be carried out by these special persons. If one wishes to summarize all the responsibilities of the bankruptcy trustee, he can easily summarize it as:
The first responsibility of the bankruptcy trustee is to appoint as well as supervise the various trustees that have been given the charge of administering the bankruptcy estates of the debtor under the various provisions of the bankruptcy law. In cases, where the private trustees are unable to serve or even they are not willing to serve, the bankruptcy trustee has to serve their roles also.
The next responsibility of the bankruptcy trustee is to take a legal action for the enforcement of various provisions of the law to prevent any abuse or fraud.
He is also given the responsibility of referring the matter for the criminal prosecution where he feels necessity for the same.
He also ensures that the professional fee that is being charged is reasonable and the bankruptcy estate is being administered properly in an efficient manner.
He has also been entrusted with the responsibility of reviewing the disclosure statements for retaining the professionals under the custody of law.
He can also advocate on different matters related to the bankruptcy, so that the interests of the creditors are not suffered by the whole proceedings.
Thus, there are many responsibilities that are given to the bankruptcy trustees.
So, The Role of Bankruptyc Trustee is Immense:
I think, after reading the above article, we are in a position to assert that
the bankruptcy trustees always work for the benefit of the various
creditors of the bankrupt debtor. He acts as per the various
provisions of the law and assures that there is no fraud or
abuse of the judiciary at any level. Though the provisions of
law relating to the bankruptcy are different in different countries,
the duties of the bankruptcy trustee is essentially the same.
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