CBA Trustee Duties & Responsibilities 1 — Questions and Answers
Question 1: What is the primary duty of a Chapter 7 trustee under 11 U.S.C. § 704(a)(1)?
- To rehabilitate the debtor's financial affairs and negotiate new loan terms
- To collect and reduce to money the property of the estate and close the estate as expeditiously as is compatible with the best interests of parties in interest (Correct answer)
- To confirm a reorganization plan for the debtor
- To represent the debtor's interests in negotiations with secured creditors
Correct answer: To collect and reduce to money the property of the estate and close the estate as expeditiously as is compatible with the best interests of parties in interest
Under 11 U.S.C. § 704(a)(1), the Chapter 7 trustee's primary duty is to collect and liquidate estate assets and close the estate as quickly as possible in the best interests of all parties.
Question 2: Under which section of the Bankruptcy Code are the statutory duties of a Chapter 7 trustee specifically enumerated?
- 11 U.S.C. § 521
- 11 U.S.C. § 704 (Correct answer)
- 11 U.S.C. § 726
- 11 U.S.C. § 327
Correct answer: 11 U.S.C. § 704
11 U.S.C. § 704 specifically enumerates the Chapter 7 trustee's duties, including collecting assets, investigating the debtor's financial affairs, and distributing proceeds to creditors.
Question 3: What action must a Chapter 7 trustee take upon discovering assets in a previously filed no-asset case?
- Immediately dismiss the case and refile it as an asset case
- File an amended no-asset report with the court
- Issue a notice to creditors to file proofs of claim so they may participate in distribution (Correct answer)
- Transfer the case to Chapter 11 for reorganization
Correct answer: Issue a notice to creditors to file proofs of claim so they may participate in distribution
When assets are discovered in a no-asset case, the trustee must notify creditors to file proofs of claim, giving them an opportunity to participate in the distribution of newly identified estate property.
Question 4: Under 11 U.S.C. § 365(d)(4), within what period must a trustee assume or reject an unexpired lease of nonresidential real property?
- 30 days after the order for relief
- 60 days after the order for relief
- 120 days after the order for relief, subject to extension by the court for cause (Correct answer)
- 180 days after the order for relief
Correct answer: 120 days after the order for relief, subject to extension by the court for cause
Under 11 U.S.C. § 365(d)(4), the trustee must assume or reject a nonresidential real property lease within 120 days after the order for relief, with possible court-approved extensions.
Question 5: Which of the following is NOT a statutory duty of a Chapter 7 trustee under 11 U.S.C. § 704?
- Investigate the financial affairs of the debtor
- File a final report and account of the administration of the estate
- Negotiate new loan terms and repayment plans on behalf of the debtor (Correct answer)
- Examine proofs of claims and object to the allowance of any claim that is improper
Correct answer: Negotiate new loan terms and repayment plans on behalf of the debtor
Negotiating new loan terms for the debtor is not a Chapter 7 trustee duty; trustees liquidate assets and distribute proceeds, not restructure the debtor's obligations.
Question 6: Under 11 U.S.C. § 326(a), a Chapter 7 trustee's maximum compensation is calculated based on which of the following?
- A flat fee established annually by the U.S. Trustee Program
- Hourly billing at rates approved by the bankruptcy court
- A sliding percentage scale applied to all moneys disbursed or turned over to parties in interest (Correct answer)
- The total number of creditors and proofs of claim filed in the case
Correct answer: A sliding percentage scale applied to all moneys disbursed or turned over to parties in interest
Under 11 U.S.C. § 326(a), a Chapter 7 trustee's maximum compensation is set by a sliding percentage scale tied to all moneys disbursed or turned over to parties in interest.
Question 7: Under 11 U.S.C. § 704(a)(4), the Chapter 7 trustee has a statutory duty to do which of the following?
- Investigate the financial affairs of the debtor only if a creditor files a formal complaint
- Investigate the financial affairs of the debtor regardless of whether creditors make a request (Correct answer)
- Investigate only if the case involves assets exceeding $100,000
- Delegate investigation duties entirely to the U.S. Trustee
Correct answer: Investigate the financial affairs of the debtor regardless of whether creditors make a request
Under 11 U.S.C. § 704(a)(4), the trustee has an affirmative statutory duty to investigate the debtor's financial affairs to identify potential assets and avoidable transfers, independent of creditor requests.
CBA Trustee Duties & Responsibilities 1
What is the primary duty of a Chapter 7 trustee under 11 U.S.C. § 704(a)(1)?