Role of the Chapter 7 New Jersey Business Bankruptcy Trustee
Although a Chapter 7 bankruptcy can provide a fresh start for business owners, it will also likely result in the sale of any substantial business assets to satisfy creditors to the greatest extent possible. While you will have the option of reaffirming any secured debts to keep those assets and exemptions may apply to protect certain (primarily personal) assets, most valuable assets will be sold.
Therefore, a Chapter 7 bankruptcy in the business context is often considered to be a liquidation. As the trustee is typically responsible for facilitating the sale, a business debtor must understand the role of the Chapter 7 New Jersey business bankruptcy trustee in the overall bankruptcy process. An experienced Chapter 7 business bankruptcy attorney could explain the trustee’s role so that you can approach your bankruptcy from an empowered place.
The bankruptcy trustee is assigned by the court to facilitate the Chapter 7 bankruptcy process. While a bankruptcy trustee is typically an accountant or attorney, it is significant to realize that they are not advocating on the debtor’s behalf throughout the bankruptcy proceedings
The role of the Chapter 7 New Jersey business bankruptcy trustee is primarily to advocate for the business owner’s creditor’s rights in maximizing the value of the business assets in the sale process. The trustee will:
- Investigate and evaluate the debtor’s financial records and all relevant documentation
- Determine whether the debtor is entitled to a discharge of debt and make a recommendation to the court
- File a notice with the court specifying whether they located any non-exempt valuable assets to sell to satisfy the claims of creditors
The role of a business bankruptcy trustee also involves evaluating whether the debtor satisfies the required means test so that they qualify for a Chapter 7 liquidation bankruptcy in the first place. If they determine that the debtor fails the means test, meaning bankruptcy under Chapter 7 is not permitted, the trustee will file a motion to dismiss the case.
Right to Discharge Debt
The trustee is obligated to oppose the debtor’s right to discharge their debts in a Chapter 7 bankruptcy if they determine the debtor:
- Has not complied with the generally applicable bankruptcy requirements
- Attempted to hide or impermissibly transfer property to avoid sale in bankruptcy
- Provided false or misleading information throughout the process
- Attempted to delay the process
If a discharge of debt is appropriate, the role of the Chapter 7 New Jersey business bankruptcy trustee involves evaluating the proof of claim documents filed by unsecured creditors.
They will generally attempt to maximize the value of any non-exempt business property through sales of assets that are worth more than any security interests or liens that may be attached to the property and will also evaluate the propriety of any security interests.
The bankruptcy trustee may also attempt to obtain and sell any assets that have been impermissibly transferred through preferential transfers under the trustee’s avoiding powers. Avoiding powers allow the trustee to set aside any preferential asset transfers made to creditors within 90 days before the bankruptcy petition was filed. Importantly, the business bankruptcy trustee may also be entitled to operate the business for a period preceding any asset sales if they believe this would benefit the creditors.
An Attorney Can Explain the Role of a Chapter 7 Business Bankruptcy Trustee from New Jersey
The role of the Chapter 7 New Jersey business bankruptcy trustee is incredibly important. They are meant to facilitate the process and make decisions that shape this process. Therefore, it is important to fully understand their role.
An attorney can help you understand the nuances of the role of a Chapter 7 business bankruptcy trustee. They can answer any questions you may have and help guide you through the process. Call today to schedule a consultation.