If your business is facing financial troubles and you’re thinking about Chapter 11 bankruptcy in Kentucky, you’ll need to appoint a trustee. This individual will be responsible for overseeing the bankruptcy proceedings and ensuring that they are carried out in accordance with the law.
Chapter 11 trustee responsibilities
Since a Chapter 11 bankruptcy often results in the company continuing to operate, the responsibilities of the Chapter 11 trustee typically involve protecting creditors and ensuring fairness in the proceedings. Once appointed, they will start by verifying the business’s financial records and documents. The trustee will also investigate any past or current fraudulent activities, as well as any transactions that have occurred, to determine if the business owner needs to rescind them.
The Chapter 11 trustee must also ensure compliance with the Bankruptcy Code, supervise the creation of a plan for reorganization by the debtor, examine all proposed plans and determine if they are feasible, keep creditors informed about the status of their claims throughout the business bankruptcy proceedings, and make sure all parties involved act in good faith and honor their commitments according to law. In addition, a Chapter 11 trustee is responsible for managing the assets of the estate during bankruptcy proceedings and distributing funds among claimants. They may even take over the management of the business if the debtor fails to meet its obligations.
US trustee vs. Chapter 11 trustee
It’s important to remember that the Chapter 11 trustee is different from a U.S. Trustee, whom the Department of Justice appoints in each state and oversees all bankruptcy cases, including Chapters 7 and 13. The responsibilities of a US trustee include monitoring bankruptcy proceedings to ensure compliance with all applicable laws, providing resources for debtors filing bankruptcy, reviewing proposed repayment plans, mediating disputes between creditors and debtors, investigating potential cases of fraud or abuse of the bankruptcy system and appointing Chapter 11 trustees when necessary.
The Chapter 11 trustee is an invaluable asset during bankruptcy proceedings, and it is important for debtors to take their role seriously when appointing one. An experienced Chapter 11 Trustee can provide valuable guidance and advice throughout the process, as well as bring a level of impartiality that is essential in any successful reorganization. When selecting a Chapter 11 trustee, make sure you consider qualifications and experience before making your decision.