Bankruptcy is very important both for a debtor who initiates it, and for the debtor’s creditors. Therefore it is not all the same if a person who might be involved in such a process in the future understands it properly or ignores its importance. The reason behind this to file for bankruptcy can have negative consequences, but if one knows how to arrange it, the process can be manageable.

So when we talk about a person who becomes insolvent, we have to emphasize the role of the bankruptcy trustee in the process. This is the person named by a judge who is responsible for managing the debtors’ affairs. A trustee must be either an Official Receiver or a licensed insolvency-practitioner. In some places, there are even permanent officials who fill in this role and thus handle all the cases that correspond to a specific jurisdiction. These permanent trustees – among other things – are also responsible for the administration of the debtors’ estates.

We should also note that creditors are favoured in some ways during a bankruptcy-process. For instance, the consent of the creditors involved in a bankruptcy must be asked. If they do not agree, another official must be named. Nevertheless, besides managing the debtor’s case and representing the interests of the creditors, a trustee has many other tasks, so its role is a really complex one.

The primary role of a bankruptcy trustee is to proceed impartially during a bankruptcy-case. This means that trustees not only represent other people, but they have a major function in determining the outcome of the process. For instance, they have the right to file pretension on behalf of the debtor and annul a preference to creditors. But more importantly, such a trustee is liable for representing the creditors’ interests who are implicitly affected by the bankruptcy.

So if this official represents the creditors, why should a debtor deal with the role of a bankruptcy trustee? The answer is simple. Trustees do not always act based on the creditors’ interests. Their primary role is to make sure that the process is legal and is based on the law. For this reason, they ask for the consent of the creditors concerned, and they check the debtor’s affairs. But these officials might also act in favour of the debtor. A good example would be that they are responsible for providing debtors with the required and legally specified property-exceptions. Similarly, they should also assist a debtor in designing and following a realistic plan in order to put an end to this process.

Finally, we should not forget that the role of a bankruptcy trustee depends on the specific case given to them. Similarly, the Court’s judgement also influences this complex role. And the last issue that is quite influential is the specific part of the law that applies in a certain case. Depending on which parts apply, a bankruptcy trustee might have the role of assuring that the assets and properties of the debtor are liquidated and thus creditors are paid based on a specific preference-list. Nevertheless, depending on other factors, they have more or less specific functions such as relieving of a charge the exemptions a debtor demands, selling the so-called “non-exempt property” and many others.

All in all, a bankruptcy trustee’s scale of involvement in such a process depends on various factors. Its role might be limited to a few tasks, but it can be a very complex one as well. In any case, a trustee is responsible for coordinating the entire process, representing the interests of both parties, protecting the rights of the creditors, and making sure that the process is legal and it has the best outcome. When the powers, rights and interests of both the debtor and the creditors are in a balance, then we can say that the bankruptcy trustee has done a good job.

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