Subchapter V Trustees: Establishing a New Type of Trustee Unlike Any Other in Title 11

This CLE course will discuss obvious and not so obvious ways in which Subchapter V Trustees (SVT) help both debtors and creditors take advantage of Subchapter V to save businesses and allow creditors to get paid. The panel will discuss the SVT's duties under Bankruptcy Code Section 1183, other duties and services that may not be widely known, review potential concerns, and identify risks faced by those acting as Subchapter V Trustees.

The SVT is the lynchpin to success in Subchapter V and is unlike any other trustee known to Title 11. The SVT is objective but not neutral. Bankruptcy judges are paying close attention to Subchapter V Trustees' assessments and recommendations.

Section 1183 is sparse and open-ended. The SVT is expected to exercise judgment to meet the needs of the case. Many of the duties SVTs are expected to perform are not even listed in the Bankruptcy Code but are discussed in the U.S. Trustee's Handbook for Subchapter V. The Subchapter V trustee is truly in uncharted territory.

The flexibility that fuels success also raises questions and concerns. It is unclear when the SVT needs an order expanding his or her duties beyond those in Section 1183 and what that expansion can include. The roles of facilitator and mediator are sometimes blurred. Questions can arise over confidentiality, conflicts with the debtor, objections to discharge, and the trustee's post-confirmation duties or ability to serve as a liquidating trustee. If the debtor is removed, the SVT has limited options. Despite the importance of the SVT, compensation is unsettled, and going unpaid is a genuine concern.

Listen as this experienced panel reviews best practices and strategies for maximizing the effectiveness of Subchapter V Trustees.