|
Asset Cases
The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor’s assets, where possible, to pay the debtor’s creditors. The trustee accomplishes this either by selling the debtor’s property or by pursuing litigation against third-parties. The trustee may hire a lawyer, realtor, auctioneer or other professional to assist in the liquidation process. It may take years for the trustee to liquidate the property, especially if litigation is required. Once all property has been liquidated and converted to money, the trustee can begin the process of closing the case.
At some point during the administration of the asset case, the trustee will file a Notice of Possible Dividends with the court, prompting the court to instruct creditors to file claims. Distribution of property of the estate is dictated by the bankruptcy code, but the trustee must review the filed claims to determine which creditors are entitled to be paid a dividend, and in what priority. The trustee may file individual objections to claims before preparing a final report, or may object to claims at the time of the final report.
In this district, the chapter 7 trustee prepares a "TFR," a Trustee's Final Report and emails that report to the Office of the U.S. Trustee to review. The TFR is a report of all monies received, and all claims filed, as well as those claims that the trustee proposes to pay, and how. The TFR will likely include a claim for the trustee's statutory compensation. The U.S. Trustee must review the report before it is filed with the court, a process which takes a period of approximately 30-90 days. After the U.S. Trustee has reviewed the TFR and filed it with the court, the court mails the TFR to all creditors and parties in interest, including the debtor, all of whom have 30 days to respond or object to the TFR, if desired. Once the 30 day period to repond or object has passed, the court may then enter an order approving the TFR, which allows the trustee to pay the dividends to creditors as proposed in the TFR.
It may take as long as 90 days for all checks to clear. After all of the recipients of the bankruptcy estate funds have negotiated their checks, the chapter 7 trustee prepares a Trustee's Distribution Report ("TDR") in which the trustee confirms that the dividends listed in the TFR for payment have been paid. The U.S. Trustee again reviews that report, generally a 30 day process, and files it with the court. The asset case will finally close approximately 30 days after the TDR is filed with the court.
|
|