CBA Trustee Duties & Responsibilities 2 — Questions and Answers
Question 1: Who presides over the Section 341 meeting of creditors in a Chapter 7 bankruptcy case?
- The bankruptcy judge assigned to the case
- The U.S. Trustee acting as a judicial officer
- The Chapter 7 panel trustee assigned to administer the case (Correct answer)
- The debtor's attorney in coordination with the court clerk
Correct answer: The Chapter 7 panel trustee assigned to administer the case
The Chapter 7 panel trustee — not the bankruptcy judge — presides over and examines the debtor under oath at the Section 341 meeting of creditors.
Question 2: Under 11 U.S.C. § 547(b)(4)(A), a trustee may avoid a preferential transfer made to a non-insider creditor within what lookback period before the petition date?
- 30 days
- 60 days
- 90 days (Correct answer)
- 180 days
Correct answer: 90 days
Under 11 U.S.C. § 547(b)(4)(A), the trustee may avoid preferential transfers made to non-insider creditors within the 90-day period immediately before the bankruptcy petition was filed.
Question 3: Under what circumstances may a trustee abandon property of the estate under 11 U.S.C. § 554?
- At any time and for any reason, without needing court approval
- Only after obtaining written consent from all secured creditors
- When the property is burdensome to the estate or is of inconsequential value and benefit to the estate (Correct answer)
- Only following confirmation of a reorganization plan by the court
Correct answer: When the property is burdensome to the estate or is of inconsequential value and benefit to the estate
Under 11 U.S.C. § 554, a trustee may abandon property that is burdensome to the estate or that has inconsequential value and benefit, ensuring the estate does not waste resources on unprofitable assets.
Question 4: Under 11 U.S.C. § 327(a), what are the two primary requirements for court approval of a trustee's employment of a professional?
- The professional must have prior bankruptcy experience and carry malpractice insurance
- Court approval must be obtained, and the professional must be disinterested and hold no adverse interest to the estate (Correct answer)
- The U.S. Trustee must personally approve the hire, and fees must be capped at $10,000
- The professional must be licensed in the state of the bankruptcy filing and approved by all creditors
Correct answer: Court approval must be obtained, and the professional must be disinterested and hold no adverse interest to the estate
Under 11 U.S.C. § 327(a), professionals may only be employed with court approval, and they must be disinterested persons who do not hold or represent an interest adverse to the estate.
Question 5: Under 11 U.S.C. § 704(a)(6), to whom must a trustee furnish information about the estate and its administration?
- Only to the bankruptcy court upon its request
- Only to the U.S. Trustee and secured creditors
- To any party in interest that makes a reasonable written request for such information (Correct answer)
- Only to the debtor and the debtor's legal counsel
Correct answer: To any party in interest that makes a reasonable written request for such information
Under 11 U.S.C. § 704(a)(6), the trustee must furnish information about the estate and its administration to any party in interest who makes a reasonable written request.
Question 6: What constitutes a breach of fiduciary duty by a Chapter 7 trustee in administering the bankruptcy estate?
- Selling estate property at fair market value through a properly noticed public auction
- Paying duly allowed administrative expense claims before general unsecured creditors
- Failing to pursue viable avoidance actions that would materially benefit the estate and its creditors (Correct answer)
- Employing a professional who has not previously handled bankruptcy matters
Correct answer: Failing to pursue viable avoidance actions that would materially benefit the estate and its creditors
A trustee breaches fiduciary duty by failing to pursue viable avoidance actions — such as preference or fraudulent transfer claims — where recovery would benefit the estate and creditors.
Question 7: When a Chapter 7 trustee determines that there are no assets available for distribution to creditors, what is the required filing?
- A motion to convert the case to Chapter 13
- A no-asset report filed with the U.S. Trustee and the court (Correct answer)
- A final accounting submitted to all creditors by certified mail
- A declaration of insolvency signed by the debtor and filed with the court
Correct answer: A no-asset report filed with the U.S. Trustee and the court
When a Chapter 7 trustee determines there are insufficient assets to distribute to creditors, the trustee files a no-asset report, which triggers the court's process to close the case without a creditor distribution.
CBA Trustee Duties & Responsibilities 2
Who presides over the Section 341 meeting of creditors in a Chapter 7 bankruptcy case?