Role of the Trustee in Florida Bankruptcy

Bankruptcies can assist debtors in avoiding debt collection and creditors in getting at least some debts repaid. 

In a bankruptcy, there are often many people involved, including a bankruptcy judge, a debtor, and multiple creditors. If the debtor is an entity, the debtor’s owners might be involved as well.

Bankruptcies also involve another person: a trustee. The trustee works with the court, debtor, and creditors to manage the bankruptcy estate.

Rather than representing any single party, the trustee provides a link between the parties and the court. They ensure the court has a full understanding of the estate and its obligations. They also enforce the court’s orders. As a result, the bankruptcy trustee’s role can include the following functions.

Investigate Assets

The trustee investigates a debtor’s assets to decide what should legally belong in the bankruptcy estate. In other words, the trustee should act objectively based on the law. They must avoid representing either the debtor’s interests, which are to keep as much property as possible, or the creditors’ interests, which are to access the debtor’s assets.

The trustee might take certain positions the debtor or creditors disagree with. In these cases, a party may file a motion with the court, and the bankruptcy judge will determine how the assets are handled.

Liquidate or Transfer Assets

In a Chapter 7 liquidation, the trustee oversees the sale or transfer of assets to maximize the estate and satisfy creditors. Again, the trustee does not act alone. 

Instead, the trustee and the trustee’s lawyer seek court approval before taking control of and liquidating assets. Importantly, the trustee’s power can include unwinding completed transfers within a specified period.

Manage the Debtor’s Affairs

In a Chapter 11 bankruptcy, the trustee helps manage the debtor’s affairs during reorganization. They might even propose a reorganization plan based on their investigation. 

In a Chapter 13 bankruptcy, the trustee ensures the debtor meets their obligations, including making debt payments. They then report the debtor’s compliance to the court.

Trustees and Bankruptcies

Trustees play an important role in bankruptcies. Shrader, Mendez & O’Connell has extensive experience advising trustees and ensuring their compliance with federal and state laws. Contact us at 813-360-1529 to learn how we can help.