Trustee in bankruptcy

Last updated

A trustee in bankruptcy is an entity, often an individual, in charge of administering a bankruptcy estate.

Contents

Canada

In Canada, a licensed insolvency trustee (LIT) is an individual or a corporation licensed by the official superintendent to hold in trust and, subsequently, to distribute a bankrupt's property among the creditors in accordance with the distribution scheme under the Bankruptcy and Insolvency Act (BIA). The bankrupt and all other persons holding bankrupt's property must transfer the property to trustee. The trustee may also assist individual in preparing and submitting a consumer proposal to creditors. The trustee must arrange mandatory counselling of the bankrupt. The trustee must follow the procedures under the BIA, call creditors meetings and send the parties required notices of proceedings and documents. The trustee is responsible for preparation of pre-discharge report and may oppose the bankrupt's discharge.

Russia

To become registered as a trustee in bankruptcy (Russian: арбитражный управляющий; transliteration: arbitrazhnyy upravlyayushchiy), one must: [1]

  1. to have a higher education degree,
  2. to have not less than 1 year of an experience as a chief executive officer,
  3. to complete the Single programme for the training of trustees in bankruptcy (Russian: Единая программа подготовки арбитражных управляющих) [2] and to pass a qualification exam, [3]
  4. to get two-years traineeship as assistant of trustee in bankruptcy,
  5. to join to one of self-regulatory organizations of trustees in bankruptcy.

Person who has finished up all above-mentioned requirements is entered in the consolidated state registry of trustees in bankruptcy (Russian: сводный государственный реестр арбитражных управляющих) which is maintained by Federal Service for State Registration, Cadastre and Cartography. [4]

Russian trustee in bankruptcy can be the member of only 1 self-regulatory organizations of trustees in bankruptcy. He can carry out other activities compatible with the position of trustee in bankruptcy, for example, be an individual entrepreneur or advocate (but it must be remembered that the status of individual entrepreneur and the status of advocate are incompatible with each other).

The term "арбитражный управляющий" (transliteration: arbitrazhnyy upravlyayushchiy) means job title. After entrance in particular insolvency (bankruptcy) case, trustee in bankruptcy is called using special term depending on particular insolvency (bankruptcy) proceeding in this case:

The Federal Law of 26 October 2002, No.127-FZ «About insolvency (bankruptcy)» provides that the function of settlement officer in liquidation procedure in insolvency (bankruptcy) cases of banks, insurance companies, pension funds and other financial institutions is carrying out by Deposit Insurance Agency of Russia (with some exceptions). [5]

United States

In the United States, a Trustee in Bankruptcy is a person who is appointed by the United States Trustee Program, a division of the United States Department of Justice. In limited circumstances, the creditors involved in a bankruptcy case can elect a trustee.

In a Chapter 7 Bankruptcy ("Liquidation") the trustee gathers the debtor's non-exempt property, managing the funds from the sale of those assets, and then paying expenses and distributing the balance to the owed creditors.

In a Chapter 13 Bankruptcy ("Reorganization") the trustee is responsible for receiving the debtor's monthly payments and distributing those funds proportionally to the debtor's creditors. The Bankruptcy Trustee will act on behalf of the debtor to guarantee that both the creditors’ and the debtor's interests are maintained in accordance with the bankruptcy laws, and will often be required to act as a negotiator between the two parties.

Since the 1990s, duties similar to those of a trustee are sometimes performed by an individual called a Chief restructuring officer (CRO), generally prior to, or subsequent to, a bankruptcy proceeding (generally, a Chapter 11 proceeding). A CRO is an official of the company who has direct contact with the creditors and who has executive power to implement changes. The advantage of using a CRO is that the arrangement gives both the creditor and debtor more say over the future of the company than might be the case where a Chapter 11 bankruptcy trustee is appointed.

See also

Related Research Articles

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Chapter 11 of the United States Bankruptcy Code permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, though liquidation may also occur under Chapter 11; while Chapter 13 provides a reorganization process for the majority of private individuals.

Chapter 7 of Title 11 U.S. Code is the bankruptcy code that governs the process of liquidation under the bankruptcy laws of the U.S. In contrast to bankruptcy under Chapter 11 and Chapter 13, which govern the process of reorganization of a debtor, Chapter 7 bankruptcy is the most common form of bankruptcy in the U.S.

<span class="mw-page-title-main">Bankruptcy in the United States</span> Overview of bankruptcy in the United States of America

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code"). The United States Constitution authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has exercised this authority several times since 1801, including through adoption of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

<span class="mw-page-title-main">Insolvency</span> State of being unable to pay ones debts

In accounting, insolvency is the state of being unable to pay the debts, by a person or company (debtor), at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

Consumer bankruptcy in Canada is governed by the Bankruptcy and Insolvency Act ("BIA"). The legislation is complemented by regulations, as well as directives from the Office of the Superintendent of Bankruptcy that provide guidelines to trustees in bankruptcy on various aspects of the BIA.

Bankruptcy in the United Kingdom is divided into separate local regimes for England and Wales, for Northern Ireland, and for Scotland. There is also a UK insolvency law which applies across the United Kingdom, since bankruptcy refers only to insolvency of individuals and partnerships. Other procedures, for example administration and liquidation, apply to insolvent companies. However, the term 'bankruptcy' is often used when referring to insolvent companies in the general media.

An officer of the Insolvency Service of the United Kingdom, an official receiver (OR) is an officer of the court to which they are attached. The OR is answerable to the courts for carrying out the courts' orders and for fulfilling their duties under law. They also act on directions, instructions and guidance from the service's Inspector General or, less often, from the Secretary of State for Business, Energy and Industrial Strategy.

<i>Bankruptcy and Insolvency Act</i>

The Bankruptcy and Insolvency Act is one of the statutes that regulates the law on bankruptcy and insolvency in Canada. It governs bankruptcies, consumer and commercial proposals, and receiverships in Canada.

An individual voluntary arrangement (IVA) is a formal alternative in England and Wales for individuals wishing to avoid bankruptcy. In Scotland, the equivalent statutory debt solution is known as a protected trust deed.

An unfair preference is a legal term arising in bankruptcy law where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy, that payment or transfer can be set aside on the application of the liquidator or trustee in bankruptcy as an unfair preference or simply a preference.

An undervalue transaction is a transaction entered into by a company who subsequently goes into bankruptcy which the court orders be set aside, usually upon the application of a liquidator for the benefit of the debtor's creditors. This can occur where the transaction was seriously disadvantageous to the company and the company was insolvent or in immediate risk of becoming insolvent.

A general assignment or assignment is a concept in bankruptcy law in which an insolvent entity's assets are assigned to someone as an alternative to a bankruptcy. One form is an "assignment for the benefit of creditors", abbreviated ABC or AFBC.

As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, similar to bankruptcy in the United States. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – in the United Kingdom colloquially called being "under administration" – is an alternative to liquidation or may be a precursor to it. Administration is commenced by an administration order.

Bankruptcy in Irish Law is a legal process, supervised by the High Court whereby the assets of a personal debtor are realised and distributed amongst his or her creditors in cases where the debtor is unable or unwilling to pay his debts.

<i>Companies Creditors Arrangement Act</i> Canadian Act of Parliament

The Companies' Creditors Arrangement Act is a statute of the Parliament of Canada that allows insolvent corporations owing their creditors in excess of $5 million to restructure their business and financial affairs.

Insolvency law of Russia mainly includes Federal Law No. 127-FZ "On Insolvency (Bankruptcy)" and Federal Law No. 40-FZ "On Insolvency (Bankruptcy) of Credit Institutions".

<span class="mw-page-title-main">British Virgin Islands bankruptcy law</span>

British Virgin Islands bankruptcy law is principally codified in the Insolvency Act, 2003, and to a lesser degree in the Insolvency Rules, 2005. Most of the emphasis of bankruptcy law in the British Virgin Islands relates to corporate insolvency rather than personal bankruptcy. As an offshore financial centre, the British Virgin Islands has many times more resident companies than citizens, and accordingly the courts spend more time dealing with corporate insolvency and reorganisation.

<span class="mw-page-title-main">Cayman Islands bankruptcy law</span>

Cayman Islands bankruptcy law is principally codified in five statutes and statutory instruments:

Anguillan bankruptcy law regulates the position of individuals and companies who are unable to meet their financial obligations.

References

  1. "О несостоятельности (банкротстве)" [About insolvency (bankruptcy)]. Federal Law No. 127-FZ of 26 October 2002 (in Russian). State Duma.
  2. "Об утверждении Единой программы подготовки арбитражных управляющих" [On approving the Single programme for the training of trustees in bankruptcy]. Order No. 517 of 10 December 2009 (in Russian). Ministry of Economic Development of Russia.
  3. "Об утверждении Правил проведения и сдачи теоретического экзамена по единой программе подготовки арбитражных управляющих" [On approving the Rules for carrying out theory examination for the Single programme for the training of trustees in bankruptcy]. Decree No. 308 of 28 May 2003 (in Russian). Government of Russia.
  4. "Об утверждении Порядка ведения сводного государственного реестра арбитражных управляющих" [On approving the Procedure for maintenance of the consolidated state registry of trustees in bankruptcy]. Order No. 238 of 18 April 2016 (in Russian). Ministry of Economic Development of Russia.
  5. Fedotova, Irina (12 August 2004). "Вклады не горят". Rossiyskaya Gazeta (in Russian).