Trustee in bankruptcy

When someone is declared bankrupt by the court, an Official Receiver is appointed to take control of all the assets of the person. The Official Receiver can be entrusted with the responsibility of selling the debtor's assets and distributing the proceeds among the creditors. When the Official Receiver supervises the sale and distribution of the properties of the debtor, he assumes the role of the trustee in bankruptcy.

The Official Receiver can conduct an investigation into the affairs of a bankrupt person, if he feels it necessary. But it’s not necessary that he would investigate into each and every bankrupt’s affairs.

The Official Receiver, on his sole discretion, may call all creditors for a meeting to decide if a licensed insolvency practitioner needs to be appointed as the trustee in bankruptcy or he himself would continue with the responsibility. If the Official Receiver does not call the creditors for a meeting, then creditors can ask for a meeting demanding an insolvency practitioner to be appointed as the trustee in bankruptcy. But the creditors asking for such a meeting must have at least a total 25% of share in the money owed by the debtor. If the creditors fail to choose any trustee in bankruptcy or their meeting doesn’t take place then in such case, the Official Receiver will continue as the trustee in bankruptcy.

The trustee in bankruptcy takes control on all assets of the bankrupt person. However, tools and vehicles necessary for performing a trade, clothing and other household items are excluded. The trustee in bankruptcy will not have a control on bankrupt’s income, if it is just sufficient to fulfill the bankrupt person’s reasonable needs. If the trustee in bankruptcy feels that the bankrupt’s income is more than that then he can make an application to get a control on bankrupt’s income.

It’s the responsibility of the trustee in bankruptcy to take custody of bankrupt’s those assets that can be used to pay off his debts. The trustee in bankruptcy will sell those assets and then will distribute the proceeds among the creditors. He may also take control of any books and papers.

Who can be the trustee in bankruptcy?

These two kinds of people can be appointed as the trustee in bankruptcy:
The Official Receiver appointed by the court to look after the bankruptcy affairs.
A licensed insolvency practitioner.
In normal bankruptcy cases, the Official Receiver continues as the trustee in bankruptcy. A licensed insolvency practitioner is appointed when the bankrupt person owns significant assets or the realisation of the assets is going to be very complex.
Powers of the trustee in bankruptcy

The trustee in bankruptcy has so many powers that give him authority to investigate into the affairs of the bankrupt. He also enjoys several administrative powers to deal with the bankruptcy affairs effectively. Some of his powers are subject to the court’s approval, however. Some even require creditor’s consent as well. But some of his powers do not require any sanction at all.

There can be many cases when the trustee in bankruptcy needs to make an application to the court to exercise his certain powers. For example, he can request the court to redirect your mails in order to investigate your affairs. If the trustee thinks that someone else possesses your property, he can apply to the court to summon that person in order to conduct an investigation. The trustee can apply to the court seeking an arrest warrant against you or an order to seize the property which is a part of the bankruptcy estate.

Your co-operation with the trustee in bankruptcy

Since the trustee in bankruptcy has enormous administrative and investigative rights, it’s important for you to fully co-operate with him. You should know how to conduct and behave properly during your bankruptcy period so that you can remain away from the investigative process of the trustee in bankruptcy. The consequences of an investigation into your bankruptcy affairs can be very negative in several cases.

However, you too have rights and you can exercise those rights to challenge any decision made by the trustee in bankruptcy. For that you will have to apply to the court. If you succeed in convincing the court, the trustee in bankruptcy might have to reconsider his decision.

If you fail to co-operate with the trustee in bankruptcy and he reports this matter to the court, it can suspend your bankruptcy discharge for either a fixed period of time or an unlimited period of time, depending upon the severity of your offence.

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