Thailand Law Journal 2010 Spring Issue 1 Volume 13

The specific statutory duties of a trustee are set forth under section 704.The trustee presides over the first meeting of creditors ("the section 341 (a) meeting") where he/she conducts an examination of the debtor s affairs, reviews the schedules and statement of affairs, investigates the assets and liquidates the non-exempt assets, issues a Report of No Distribution if there are none, as well as taking steps to abandon them. The trustee also analyzes motions by creditors affecting the assets, institutes adversary proceedings to recover preferences or fraudulent conveyances, compels turnover of property, assumes or rejects executor contracts or leases, objects to or seeks revocation of the debtor's discharge, reviews proofs of claim and moves to expunge or reduce them where warranted.

Regarding the role of the chapter 11 trustee, since the debtor who has filed under chapter 11 customarily remains in possession of its assets and continues to operate its business, the debtor-in-possession is granted all the powers of a trustee (see 11. U.S.C. 1107). However, upon request and after notice and hearing, section 1104 provides that the court is authorized to order the appointment of a trustee for fraud, dishonesty, incompetence or gross mismanagement of the affairs of the debtor by current management, or where appointment of a trustee would be in the best interest of the creditors.

Under sections 103 and 327, a chapter 7 or a chapter 11 trustee may employ professionals/including attorneys, accountants, appraisers or auctioneers to "represent or assist the trustee" in performing trustee duties under title 11. These professionals may be awarded compensation for actual and necessary services and reimbursement for actual and necessary expenses pursuant to section 330. The employment of professionals must be approved by the court.

A trustee's compensation is determined under 11 U.S.C. $330 and the statutory cap set out in 11 U.S.C. $326(a), as amended in 1994. That section provided that in a case under chapter 7 or 11, the court may allow reasonable compensation under section 330 of this title to the trustee for the trustee-s  services, payable after the trustee renders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but  not in excess of $1,000,000, and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in the case by the trustee to interested parties, excluding the debtor, but including holders of secured claims. The U.S. Trustee must review a trustee's application to determine that the requested compensation does not exceed the statutory limitation and is reasonable.

Audits, examinations, and reviews of each chapter 7 trustee's accounting and case administration activities are conducted periodically. The audits are performed by independent certified public accountants or the Department of Justice's Office of the inspector-General. The examinations and reviews are performed by United States Trustee personnel (e.g., a "UST Field Exam" or a "Case Administration Review").The U.S. Trustee is responsible for supervising trustees. 28U.S.C. $586. If the nature of the trustee's actions reflects dishonesty, deceit, fraud, or serious mishandling of estate funds, a single substantiated incidence justifies immediate action by the U.S. Trustee to protect the bankruptcy estates. The remedies considered by the U.S. Trustee include motions to remove the trustee from his/her case(s), temporary restraining orders, orders for turnover of books and records, and referral to the U.S. Attorney and state licensing authorities Trustee-s conduct that does not rise to the level of dishonesty, fraud, or immediate asset risk merits the use of progressive or cumulative remedies that range in severity from meeting with the trustee to filing motion to compel, seeking disgorgement or surcharge, temporarily suspending the trustee from rotation, not reappointing the trustee to the panel, or seeking to permanently remove the trustee from all cases. Imposition of these remedies is at the discretion of the U.S. Trustee. The types of conduct that may warrant one or more of these remedies include substandard reporting or asset investigation efforts, repeated instances of under bonding, inadequate internal controls, or weak case administration.

3.2 The Commonwealth of Australia⁷

A person who administers a bankruptcy case in Australia is called
 a trustee. In cases when a debtor becomes bankrupt, the trustee will either be a registered trustee or an Official Trustee from the Insolvency Trustee Service Australia (ITSA). A registered trustee is a private individual registered with ITSA to be a trustee of bankruptcies and Personal Insolvency Agreement: PartX or a controlling trustee. A registered trustee can also be a Debt Agreement administrator: Part IX. ITSA is a Commonwealth government agency and is the trustee when a registered trustee is not appointed.

The general duties of a trustee are expressed in section 19 of the Bankruptcy Act including determining whether the estate includes property that can be realized to pay a dividend to creditors; determining whether the bankrupt has made a transfer of property that is void against the trustee; taking appropriate steps to recover property for the benefit of the estate; administering the estate as efficiently as possible by avoiding unnecessary expenses; and exercising powers and performing functions in a commercially sound way. In addition, other statutory responsibilities encompass convening meetings of creditors when directed to do so by one-forth in value of the creditors (section 64(t)(b)J; declaring and distributing dividends among creditors as expeditiously as possible section 140); declaring and paying a final dividend (section 145); and taking possession of all property of the bankrupt (section 129(1)). Powers of trustees are stipulated in sections 134 and 135 and include selling property; carrying on a bankrupt's business so far as may be necessary to dispose of it or wind it up for the benefit of creditors; compromising any debt due to or by the bankrupt: obtaining advice and assistance necessary for the trustee to administer the estate: and instituting or defending legal proceedings. It is worth noting that there is no role for a registered trustee to play incorporate Voluntary Administration which is equivalent to Chapter 11 Reorganization under the US Bankruptcy Code.

To become a registered trustee, a person must lodge an application with the Inspector-General in Bankruptcy, Head of ITSA. The application must be accompanied by an application fee of $2,000 and supporting documents. The Inspector-General then convenes a committee to consider an application. The Committee consists of the Inspector-General's delegate, an officer of the Australian Public Service (APS) and a registered trustee nominated by the Insolvency Practitioner Association of Australia (IPAA). The Committee considers the application, including all the supporting documents and interviews the applicant. The applicant may also be asked to sit an examination. The committee decides, within 60 days of the interview, whether or not to register an applicant as a trustee and provides reasons for its decision to both the applicant and the Inspector-General. To complete the registration process, the successful applicant must provide a registration charge of $1,200 and evidence that they have obtained, or will obtain, professional indemnity insurance. If the applicant is not satisfied with the Committees decision, they may apply to the Administrative Appeals Tribunal for a review of the decision. For a successful applicant, the Register Officer registers the applicant on the National Personal Insolvency Index (NPII) and issues him/her a certificate of registration for a period of three years (section 155C(4)) and this term may be extended on application (section 155D). The trustee s name, firm details and preferred contact details are registered on the HPW and also recorded on ITSA-s website for public use.