The Department of Justice and the U.S. Trustee are charged with ensuring the integrity of the bankruptcy system. In order to accomplish this, the U.S. Trustee program may oversee administration of cases and engage in litigation to enforce compliance with the law.

While both individuals and corporations or partnerships are permitted to file bankruptcy petitions pursuant to Chapter 11 of the United States Bankruptcy Code, most petitions under this Chapter are filed by corporations or partnerships.

Chapter 11 Relief

Chapter 11 of the United States Bankruptcy Code is another avenue under the Code in which an individual or an entity may obtain relief from increasing debt that the individual or entity will otherwise be unable to pay.

The method used under Chapter 11 in order to provide relief to a debtor, is reorganization. Under Chapter 11 debtors may continue operations while complying with a court-approved reorganization plan. Generally, first the debtor files a reorganization plan. Next the creditors will evaluate the debtor’s plan. It is the court’s duty to ultimately determine whether to approve the reorganization plan. This approval is often also called confirmation of the plan.

Under a reorganization plan, a debtor is able to reduce debts by repaying some debt and discharging, or eliminating, other debt.

The Trustee

Generally, the duties of the U.S. Trustee in a Chapter 11 bankruptcy case are set forth in 28 U.S.C. § 586. They include the following:

  • Reviewing the debtor’s requests for emergency orders early in a bankruptcy case, and ensuring that the requested relief is tailored to the circumstances.
  • Determining what official committees should be established to serve in the case; appointing committee members; and engaging in oversight of committee actions.
  • Reviewing reorganization plans and disclosure statements filed by parties in the case to make sure they provide adequate and accurate information.
  • Ensuring that all required reports, schedules, and fees are timely filed, and that the debtor manages money and assets consistent with the Bankruptcy Code and with its fiduciary duty to creditors.
  • Taking action to prevent undue delay by, for example, filing a motion to dismiss the case, to convert the case to a Chapter 7 liquidation, or to appoint a Chapter 11 trustee.
  • Reviewing and, if appropriate, objecting to applications filed by professionals seeking employment in the case, payment of compensation, and/or reimbursement of expenses.
  • Investigating criminal, fraudulent, or abusive conduct for possible civil or criminal prosecution.

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