During bankruptcy, a trustee is assigned to assist with the process. In
Chapter 11, the U.S. trustee's role is important in monitoring the
case as it progresses and in supervising how the case is administrated.
Additionally, the trustee is responsible for oversight of the debtor in
possession as the business continues to operate.
Chapter 11 business bankruptcy often results in a company continuing to operate while
repaying creditors over time, the operation of the business is important
for the success of the reorganization effort. The debtor in possession
is required to submit reports to the U.S. trustee to provide information
about the operations. Additionally, the debtor is required to pay fees
which are submitted to the trustee. The trustee is responsible for coordinating
with creditors and scheduling meetings of creditors so that the debtor's
actions can be questioned while under oath.
A trustee establishes guidelines for the debtor's reporting on income
and expenses. The debtor will also need to report to a trustee about issues
such as bank accounts and payment of taxes. The debtor is expected to
pay a fee to the trustee on a quarterly basis until the point at which
the bankruptcy case is either dismissed or converted to another chapter,
which can also be the result in cases of noncompliance at the option of
Prior to filing for Chapter 11, a business owner might want to discuss
alternative options with an attorney so that all possibilities can be
explored. In some cases, a reorganization may last a short time before
a company can regain solid financial standing. In other cases, a company
may be better served by liquidating and ceasing operations.
Source: United States Courts, "
Reorganization Under the Bankruptcy Code", October 29, 2014