Bankruptcy trustees in Canada usually refer to corporations or individual’s that are legally permitted to distribute the existing property of a bankrupt individual among all his creditors or to hold this property in trust. Distribution of assets among creditors is done by the trustee in accordance with the laws and rules laid down by BIA or the Bankruptcy and Insolvency Act’s distribution scheme. The official superintendent is entitled with the duty of licensing the bankruptcy trustee and for granting permission for this property distribution.
Roles and Responsibilities of a Bankruptcy Trustee
Once the bankruptcy trustees are given the legal right to access the bankrupt individual’s property and assets, the insolvent person and everybody else who has a stake in the bankrupt individual’s property and assets, must transfer the assets and property to the bankruptcy trustee.
It is also the responsibility of the trustee to help the bankrupt individual submit and prepare a consumer proposal for creditors. The bankruptcy trustee is mandatorily expected to arrange for the bankrupt person’s credit counselling or debt counselling.
Bankruptcy trustees cannot violate the rules of the Bankruptcy and Insolvency Act and is bound by law to follow the BIA’s procedures. The trustee is also entrusted with the responsibilities of calling meetings for creditors and for sending notices and documents of proceedings to the concerned parties.
The trustee has the full right to oppose the discharge of the bankrupt individual and is also required to prepare the pre-discharge report of the bankrupt person.
Common Duties of Bankruptcy Trustees
They are responsible for distributing funds to creditors, selling assets that are not exempted, chairing meetings of creditors, reviewing files for detection of fraudulent preferences, reviewing transactions and objecting to the discharge of the bankrupt person.
A bankruptcy trustee is also entrusted with the duty of calling the creditors’ first meeting for a number of reasons. These purposes include appointment of inspectors, affirmation of the trustee appointment or some kind of a substitute in that place, consideration of the bankrupt individual’s affairs and providing of directions and orders to the bankruptcy trustee for proper administration of the estate.
The bankruptcy trustee acts as the representative of the court in any case of bankruptcy. His responsibility involves examination of all the documents that the debtor has filed, monitoring creditor claims, verifying validity of those claims and verification of whether the bankrupt individual can actually qualify under the category filed for.
It is the job of the trustee to protect the bankruptcy system’s integrity. The trustee also decides which debtor assets should be sold off for repaying debts, manages this sales process and takes possession of the debtor’s non-exempted assets.
A Word of Caution
If a bankrupt individual intentionally provides false information to or withholds valuable information from trustees, he or she might face criminal charges and his/her case may be dismissed.
The bankrupt individual may also have to brace up for government initiated investigation on charges of alleged bankruptcy fraud. Bankruptcy trustees, even the individual ones, on the other hand, may be subjected to auditing for criminal/ethical violations or for breaching fiduciary duties.
Don’t do it if you can help it. Having said that I know that the relief felt by families buried in debt can be a very healing. All the best.