Bankruptcy Trustees – What Do They Do?

Bankruptcy trustees in Canada generally refer to corporations or individuals who are legally authorized to distribute a bankrupt person’s existing property to all of their creditors or hold this property in trust. The distribution of assets among the creditors is carried out by the trustee in accordance with the laws and regulations established by the BIA or the distribution scheme of the Bankruptcy and Insolvency Act. The official superintendent has the duty to license the bankruptcy trustee and to grant permission for this distribution of assets.

Roles and responsibilities of a bankruptcy trustee

Once the bankruptcy trustees are granted the legal right to access the property and assets of the bankrupt person, the insolvent person, and all other persons who have an interest in the person’s property and assets Bankruptcy must transfer assets and property to the bankruptcy trustee.

It is also the trustee’s responsibility to help the bankrupt person file and prepare a consumer proposal for creditors. The bankruptcy trustee is mandatorily expected to handle credit or debt counseling for the bankrupt.

Bankruptcy trustees cannot violate the rules of the Bankruptcy and Insolvency Act and are required by law to follow the procedures of the BIA. The receiver is also charged with the responsibilities of calling creditors’ meetings and sending notices and procedural documents to interested parties.

The trustee has the full right to oppose the bankruptcy’s liquidation and is also required to prepare the bankruptcy’s pre-liquidation report.

Common Duties of Bankruptcy Trustees

They are responsible for distributing funds to creditors, selling assets that are not exempt, chairing creditors’ meetings, reviewing files for fraudulent liens, reviewing transactions, and challenging the discharge of the bankrupt.

A bankruptcy trustee is also entrusted with the duty of calling the first meeting of creditors for a number of reasons. These purposes include the appointment of inspectors, the confirmation of the appointment of the trustee or some type of substitute in that place, the consideration of the affairs of the bankrupt person, and the furnishing of instructions and orders to the bankruptcy trustee for the proper administration of the Heritage.

Other responsibilities

The bankruptcy trustee acts as the representative of the court in any bankruptcy case. His responsibility involves the examination of all the documents that the debtor has presented, the follow-up of the creditors’ credits, the verification of the validity of those credits and the verification of whether the bankrupt person can really qualify under the requested category.

It is the trustee’s job to protect the integrity of the bankruptcy system. The trustee also decides what debtor’s assets must be sold to pay the debts, administers this sale process, and takes possession of the debtor’s nonexempt assets.

A word of caution

If a bankrupt person intentionally provides false information or withholds valuable information from the trustees, they could face criminal charges and their case could be dismissed.

The bankrupt person may also have to prepare for a government-initiated investigation on charges of alleged bankruptcy fraud. Bankruptcy trustees, even individual ones, on the other hand, can be subject to audit for criminal/ethical violations or breaches of fiduciary duties.

last word

Don’t do it if you can avoid it. With that being said, I know that the relief felt by families buried in debt can be very healing. All the best.