A Primer on Chapter 11 Trustees & Examiners

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April 9, 2025

A Primer on Chapter 11 Trustees & Examiners

New York Law Journal

A debtor that files for Chapter 11 is referred to as a “debtor in possession.” Bankruptcy Code section 1107 empowers a debtor with the rights and powers of a trustee.

A debtor in possession will be responsible for marshaling assets, administering the business of the estate, proposing and seeking confirmation of a plan of reorganization, asserting avoidance actions to claw back property of the debtor’s estate, and distributing assets to creditors.

Courts have regularly held that a Chapter 11 corporate debtor in possession is a statutory fiduciary.

However, where a debtor is suspected of having engaged in fraud or other misconduct, parties-in-interest may not trust the debtor’s existing management to continue operating the business. As a result, parties-in-interest may move for the appointment of a trustee to replace management and take control of the debtor’s business.

To continue reading Daniel Lowenthal and Kimberly Black's article in New York Law Journal, click here.

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