Role of Trustee in Bankruptcy - Explained
What does the Bankruptcy Trustee Do?
Written by J. Mance Gordon
Updated at April 19th, 2024
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What is the authority of the trustee (debtor in possession) in bankruptcy?
As previously discussed, the trustee in bankruptcy plays an important role in the administration of a bankruptcy case. The general authority of the trustee includes:
- affirming or disaffirm contracts with the debtor which are yet to be performed;
- setting aside fraudulent conveyances from the bankruptcy estate;
- voiding certain preferential transfers of property by the debtor to creditors;
- suing those who owe the debtor an obligation that is not paid; and
- setting aside statutory liens on property taking effect upon the filing of bankruptcy.
Remember, the trustee in bankruptcy plays a primary role in all individual bankruptcies and business liquidation bankruptcies. Trustees are only appointed in business reorganizations in limited circumstances. It is the responsibility of the DIP to administer the bankruptcy estate. The authority of the DIP is discussed separately.
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