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Role of Trustee in Bankruptcy - Explained

What does the Bankruptcy Trustee Do?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is the authority of the trustee (debtor in possession) in bankruptcy?Panel titleDiscussion QuestionPractice QuestionAcademic Research

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.

Next Article: Assets Included in Bankruptcy Estate Back to: BANKRUPTCY LAW

Related Topics

  • Participants in the bankruptcy process?
  • Key concepts behind the bankruptcy process?
  • Absolute Priority Rule
  • Pari Passu
  • What rules govern the bankruptcy process?
  • Bankruptcy Abuse Prevention and Consumer Protection Act
  • American Bankruptcy Institute Definition
  • Authority of the bankruptcy court?
  • Authority of the trustee (debtor in possession) in bankruptcy?
  • Debtor in Possession
  • The bankruptcy estate?
  • Bulk Sales Law
  • Automatic stay in bankruptcy?
  • Claims by creditors of the bankruptcy estate?
  • Voluntary and involuntary bankruptcy?

Panel title

Panel content

Discussion Question

What do you think about the authority of the bankruptcy trustee? Why do you think the trustees authority is so broad?

Practice Question

ABC Corp is in the process of a liquidation bankruptcy. A bankruptcy trustee has been appointed to control ABCs bankruptcy estate. What are the powers of the trustee in settling the debts and obligations of the estate?

Academic Research


role of trustee bankruptcy

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