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Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.
The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)

Service to the Estate and Ethics: Standing/Panel Trustee
IDNameGroupOtherCode
Sec
Cross
Ref
Problem ReferencedProposed Solutions
NBRC-
0009
Honorable James E. YacosJudiciary; United States Bankruptcy Court for the District of New Hampshire
326
Chapter 7 suffers from an overly rigid trustee commission schedule which does not draw any distinction between an appropriate fixed commission schedule as contrasted with "creation of the estate" activity which means aggressive pursuit of highly disputed receivables and causes of action.Trustees should be encouraged to vigorously pursue recoveries and compensated accordingly in order to provide for the risk and uncertainty involved. Increased compensation in this area would remove the pressure to appoint attorneys for trustees in many cases.
NBRC-
0012
Saul EisenPresident; National Association of Bankruptcy TrusteesOctober 12, 1995, Working Paper

Trustees are being exposed to significant liability while performing their functions which include, for example, liabilities for environmental problems, unpaid taxes, and pension plan terminations. Courts have taken different directions with regard to the exposure of the trustee for actions taken in a fiduciary capacity. It is not fair to impose the risk of personal liability on a trustee who is frequently faced with a situation in which information is not available.The law should be clarified to limit the liability of panel trustees to intentionally wrongful acts and acts constituting gross negligence.
NBRC-
0012
Saul EisenPresident; National Association of Bankruptcy TrusteesOctober, 12, 1995, Working Paper327
Law as developed in the courts is unclear as to whether the trustee has the ability to retain him/herself or his/her law firm to represent the trustee.Clarify the law in this area. Many trustees could not afford to remain trustees if they are unable to retain themselves or their firms for professional work.
NBRC-
0012
Saul EisenPresident; National Association of Bankruptcy TrusteesMarch 29, 1995, Letter

The U.S. Trustee currently appoints panel trustees for one-year terms, and the statute does not specify any rights of panel trustees to reappointment and some trustees have subject to suspension from rotation or removed totally from service with little, or no, notice.In order to secure the continued expertise of panel trustees that have the experience and resources to adequately administer Chapter 7 cases, those trustees must be given adequate security for their continuing role as panel trustees. The appointment of trustees to a Chapter 7 panel should not be limited to a one-year term and adequate protection should be given to the trustee in the form of an opportunity to present a case to a competent tribunal.
NBRC-
0012
Saul EisenPresident; National Association of Bankruptcy TrusteesMarch 29, 1995, Letter326
Under the current system, a trustee is entitled to a reasonable fee, not to exceed certain percentages which are defined in the statute. In most Chapter 7 cases, trustees receive the maximum statutory amount allowable, and the difference between "reasonable" fee and the "statutory percentage" is not discussed. There is confusion and inconsistency in decisions with regard to whether the statutory percentage is only a maximum and trustees may be held to more subjective review in determining the amount of their fee; trustees don't know whether they will be entitled to a statutory percentage of the funds disbursed in a case, or whether they will be paid on an hourly basis.Trustees should be compensated in a manner similar to auctioneers and real estate agents who receive a percentage of the funds received from the administration of assets. The statutory allowance and percentages currently in place can be maintained, but the formula should not be subject to the extensive variances which have developed in different jurisdictions.
NBRC-
0018
Peter H. ArkisonPractitioner


The Trustee is expected to efficiently and effectively administer the estate, yet is not given the funds, discretion, or any ability to do so. For example, a trustee frequently cannot effectuate asset sales (such as motor vehicles) because of the time required to notice and obtain approval of the sale.The Bankruptcy Code needs to recognize that the Trustee is a meaningful party in the process who is a qualified, professional person. All of the interim sales and actions should not have to be noticed to creditors and have judicial approval.
NBRC-
0021
James I. ShepardPractitioner; Commissioner, National Bankruptcy Review Commission


The Code does little to define the responsibility of a debtor or trustee to obey the law during the case and the law is confusing with regard to the standards that should be employed in determining trustee liability in various situations.Standards should be set and codified.
NBRC-
0116
Kenneth J. DoranLaw Offices of Kenneth J. DoranParticipated at Consumer Bankruptcy Working Group on July 19.

§ 341 meetings are inefficient.Require § 341 meetins only when requested by a party in interest, after notice and a hearing. Place the primary burden of requresting § 341 meetings on trustees.
NBRC-
0117
E. Rothberg



Chapter 13 Trustees are not geared to handle sole proprietorship Chapter 13 cases. This forces the attorneys to file multiple amendments to the Chapter 13 plan.Improve the ability of the Chapter 13 Trustee to track payments in more complicated Chapter 13 cases.
NBRC-
0120
Judith ElstonChrysler Financial Services, Toyota Motor Credit Company, Ford Motor Credit Company, General Motors, and American Financial Services
341
Section 341 meetings are useless.Amend the Bankruptcy Code and Rules to allow creditor representatives to attend "first meetings" in place of lawyers, if sufficient corporate delegation, supervision and training is provided. Furthere, the purpose of the meetings should be achieved and if not, the meetings should be replaced with an effective process.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees


Leave the panel trustee program alone as it serves the public interest.None needed.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees


Appointment periods of Chapter 7 panel trustees are unduly limited. Furthermore, these trustees lack a venue to protest their removal from a panel.Expand the appointment period of Ch. 7 panel trustees and provide forum and appeals process for trustees to protest their removal from a panel.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees


The Bankruptcy Code does not limit the personal liability of trustees for actions taken in their fiduciary capacity.The Bankruptcy Code should provide immunity to trustees for actions which are not willful or deliberate.
NBRC-
0136
Jospeh I. WittmanNational Association of Bankruptcy Trustees
327
Certain courts prohibit trustees from hiring themselves or a professional under 11 U.S.C. § 327.Clarify that § 327 specifically authorizes trustees to hire themselves or their own firm as a professional under 11 U.S.C. § 327.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees
326
There is confusion in the law regarding whether trustees are entitled to a statutory percentage of funds disbursed, or whether their compensation will be limited to a reasonable hourly fee.Clarify that the trustees are entitled to a percentage of the funds received from administration of the estate.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees


The trustee's rights and fee recoveries in converted cases are unduly limited.Preserve the trustee's rights in converted cases to pursue avoidance actions and object to claimed exemptions. Improve the monitoring of administrative expenses in Chapter 11 cases. Prohibit debtors from converting cases from Chapter 7 to 11 or 13 when coversion is sought to defeat the trustee's pursuit of an action which adversely affects the debtor. In cases converted from Chapter 11 to 7, permit the trusteee to recover fees based on the reasonable value of the assets which would have been recovered and disbursed to creditors in the Chapter 7 proceeding. Alternatively, the trustees' fee could be based on the disbursements made in a subsequent Chapter 11, 12 or 13 plan.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees
363522Current exemption laws permit debtors to retain an unequitable amount of assets which should be paid to creditors.Review the exemptions scheme within the bankruptcy process and recomment appropriate changes which would increase the uniformity of exemption laws, and prevent abuse of the bankruptcy process.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees
507
The 1994 amendments unduly expanded the number of allowed priority claims at the expense of general unsecured creditors.Limit the number of priority claims.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees
341
The § 341 meeting of creditors should be retained.N/A
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees


Discharge hearings serve no purpose.Expressly eliminate discharge hearings.
NBRC-
0136
Joseph I. WittmanNational Association of Bankruptcy Trustees


The interrelation between the Internal Revenue Code and the Bankruptcy Code is confusing and overly burdensome.The taxation of bankruptcy estates, and the duties of trustees in preparing tax returns should be reviewed, clarified, and amended provide trustees with clear guidelines within which to perform their statutory duties, and prevent estate assets from being "swallowed" by a capital gains tax.
NBRC-
0193
James V. Stanton and Richard A. Steyer, on behalf of Natl. Assoc. of Bankruptcy TrusteesAttorneys and bankruptcy trusteesStatement by Saul Eisen, NABT's president

In the attached statement, the president of the National Association of Bankruptcy Trustees ("NABT") states that the greatest concern of NABT members is the question of private panel trustee tenure and grounds for removal. They feel that removal procedures for panel trustees do not satisfy due process and are, "at best, not subject to judicial review." Unlike U.S Trustees, panel trustees have no procedural protection against arbitrary dismissal. In addition, members are concerned about panel trustees' tenrure and appointment. Presently, panel trustees are appointed for a one-year term, renewable by the U.S. Trustee. The panel trustee system, however, has no safeguards to guarantee that a panel member whose performance and evaluation are satisfactory will not be removed on arbitrary grounds.Procedural safeguards should be established to protect panel trustees from arbitrary dismissal and to ensure due process.
NBRC-
0193
James V. Stanton and Richard A. Steyer, on behalf of Natl. Assoc. of Bankruptcy TrusteesAttorneys and bankruptcy trusteesStatement by Saul Eisen, NABT's president

In the attached statement, the president of the National Association of Bankruptcy Trustees ("NABT") states that panel trustees' liability should be limited to certain types of activities. Under the cuurent panel trustee system, they are exposed to more potential claims than ever before. Consequently, courts have imposed liability for an increasing number of activities, including environmental problems, unpaid taxes, and pension plan terminations. In addition, panel trustees are required to "file tax returns for defunct companies even when no funds exist to pay for [their] services."Panel trustees' liability should be limited to acts that are either intentionally wrongful or grossly negligent.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The first issue under consdieration is that the standing trustee must avoid the appearance of impropriety assocaited with nepotism.The proposed standard of conduct is as follows: Nepotism A standing trustee shall not employ a relative. For purpose of this rule, a relative is an individual related to the standing trustee by affinity, consanguinity or marriage within the third degree as determined by the law of the state where the standing trustee is located, an individual in a step or adoptive relationship within such third degree, a spouse, or an individual whose close association with the standing trustee is the equivalent of a spousal relationship. "Comment" and "Implementation" language is attached to this proposal.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesStandards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The second concern is that standing trustees must be prevented from taking more moetary benefit from the funds entrusted to them than is permitted by the Attorney General.The proposed standard of conduct is as follows: Related Party Transactions (a) Except for those trustees with an exemption under Standard 3 allowing for allocation of expenses, a standing trustee shall not enter into a contract with himself or herself, or with any entity in which the standing trustee or a relative has a financial or ownership interest, if the costs are to be paid as an expense out of the fiduciary expense fund. (b) A standing trustee shall not direct debtors or creditors to parties that provide products or services, such as insurance or financial counseling, in which the standing trustee or relative of the standing trustee has a financial or ownership interest. (c) For purposes of this standard, a financial or ownership interest excludes ownership of stock in a publicly traded company; which ownership interest is de minimus. (d) The definition of "relative" in Proposed Standard 1 applies to this standard. "Comment" and "Implementation" language is attached to this proposal.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The third concern is that because allocation methods are often subjective and non-quantitative, it is difficult to determine whether expenses allocated to the administration of bankruptcy estates are actual expenses of administration.The proposed standard of conduct is as follows: Allocation of Expenses A standing trustee cannot share or allocate expenses with another entity except upon the written authorization of the United States Trustee. That approval may be given only where: (1) the standing trustee has insufficient receipts to earn maximum compensation; or (2) the trustee is appointed to serve as both a Chapter 12 standing trustee and a Chapter 13 standing trustee, and allocation between the two chapter operations is appropriate. "Comment" and "Implementation" language is attached to this proposal.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The fourth concern is that any appearance of self-dealing must be eliminated.The proposed standard of conduct is as follows: Restriction on Employment of Standing Trustees A standing trustee may not for compensation engage, hire, or contract with another standing trustee if the costs are to be paid as an expense from fiduciary expense funds. "Comment" and "Implementation" language is attached to this proposal.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The fifth concern is that the expectation that a standing trustee appointment can be inherited must be dispelled.The proposed standard of conduct is as follows: Qualifications for Appointment of a Standing Trustee The United States Trustee shall not appoint as a standing trustee any individual who is: a. a relative of any standing trustee within the region or in a contiguous region; b. a relative of any standing trustee within the region, or a contiguous region, who died, resigned or was removed from a case within the preceding one year period; c. a relative of any federal bankruptcy or district judge within the judicial district or a contiguous district; d. an employee or former employee of the Department of Justice within the preceding one-year period; or e. a relative of an employee in any of the offices of the United States Trustees or in the Executive Office for the United States Trustees. "Comment" language is attached to this proposal.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The first and second proposed standing trustee handbook provisions are as follows: 1. Expenses (generally) A standing trustee is allowed to make necessary expenditures from fiduciary expense funds to administer the estates efficiently and effectively. Expenses must be reasonable, actual and necessary; relate to the duties of the trustee; and be supported by proper documentation. Property records are to be maintained for depreciable assets. When making expenditures, the trustee needs to remember every dollar spent on trustee operations is taken from wage earner debtors and their creditors, and trustees hold all monies received as fiduciaries. Subject to the fiduciary duties of the trustee, the Program seeks to encourage each trustee to determine the most cost-effective method of running the trust operation. 2. Payment or Reimbursement for Legal Expenses Standing trustees must seek prior written authorization from the United States Trustee to use fiduciary expense funds to pay legal expenses incurred in the defense of actions or proceedings. "Comment" language is attached to this provision.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The third proposed standing trustee handbook provision is as follows: 3. Rent and Utilities Rent for office space must be at the local market rate. When moving into new office space or renewing a lease, the trustee should obtain rental rates for comparable space to ensure that the rate for the trust operation is at market rate and reasonable for operations funded from a fiduciary expense fund. The trustee's budget should include rent for only the amount of space reasonable and necessary to carry out the trustee's duties. To determine the appropriate amount of space, the trustee should be guided by standards established by the General Services Administration (GSA). "Comment" language is attached to this provision.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The fourth proposed standing trustee handbook provision is as follows: 4. The standing trustee must obtain a minimum of three bids when requesting the United States Trustee to approve a capital expenditure of $2,500 or more. "Comment" language is attached to this provision.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The fifth proposed standing trustee handbook provision is as follows: 5. Employee Salaries The standing trustee must develop and institutionalize salary ranges for each employee position. These ranges must be similar to the range in the local market for a position requiring the same or similar skills and the same number of hours. The standing trustee is to submit the proposed pay chart to the United States Trustee for written authorization. "Comment" language is attached to this proposal.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The sixth, seventh and eighth proposed standing trustee handbook provisions are as follows: 6. Travel Mileage reimbursement for use of a personal automobile for necessary travel beyond the usual place of business is authorized at the rate allowed by the Internal Revenue Service. A long-term lease or purchase of an automobile with trust funds is not appropriate. Reimbursement for meals is authorized if the official travel causes the standing trustee or employee to be away from the office for more than 10 hours. Reimbursement for lodging is authorized if the trustee or employee travels more than 50 miles from the office and an overnight stay is necessary. 7. Placement Fees/Temporary Help The standing trustee may hire temporary personnel with written authorization of the United States Trustee; however, the use of temporary personnel as a standard procedure for hiring new permanent employees is not authorized if it results in significant placement charges and turnover. 8. Miscellaneous Expense Items Items such as the following are not authorized expenditures: flowers, soft drinks, alcohol, food, party supplies, gratuities, parking fines or speeding tickets, and tax penalties (e.g. penalty for failing to pay employee taxes timely).Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The ninth proposed standing trustee handbook provision, regarding fiduciary expenses, is as follows: 9. Employee Benefits The standing trustee may request an overall employee benefits package of up to 20 percent of total base salaries of all employees (benefits do not include FICA, FUTA, workers' compensation, or other mandatory deductions). The standing trustee has the discretion to develop a benefits package without pre-approval from the United States Trustee from the following benefits list: medical/hospital; vision; prescription; dental; life; disability; retirement; dependent day care; and transportation subsidiaries. The standing trustee is required to provide a report listing each benefit and the cost to the fiduciary expense fund of each benefit. "Comment" and "Implementation" language is attached to this proposal.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The tenth proposed standing trustee handbook provision, regarding fiduciary expenses, is as follows: 10. Conference Training Expenses The standing trustee may use up to one percent of the fiscal year operating expense fund or $3,000, whichever is greater, to provide training activities for employees or the standing trustee. The standing trustee does not have to receive pre-approval for training expenditures so long as they meet the following conditions: 1) all expenses associated with the training (such as conference registration, textbooks, travel, meals, lodging) are included in the training/conferences line item of the budget, 2) courses, seminars, and conferences for the standing trustee and/or employees are bankruptcy-related or dirently related to the duties of the standing trustee or an employee, and 3) the expenses are reasonable and necessary. The standing trustee is required to provide a report listing each seminar, person attending, and cost. This report will cover the fiscal year and should be attached to the annual report. Training mandated by the United States Trustee is not included in the one percent allotment. "Comment" language is attached to this provision.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The eleventh proposed standing trustee handbook provision, regarding fiduciary expenses, is as follows: 11. Professional Dues Standing trustee or employee dues for professional organizations are not a necessary expenditure from fiduciary expense funds. "Comment" language is attached to this provision.Same.
NBRC-
0194
Joseph Patchan, on behalf of U.S. Trustees Office, Standing Trustee SubcommitteeStanding Trustee Subcommittee, Executive Office for U.S. TrusteesProposed standards and amendments re: standing trustees.

Author supplments his remarks from the New Orleans hearings with a copy of the U.S. Trustees' Office's proposed ethical standards and procedural changes for standing trustees. While NBRC members may have heard about these proposals, the author is unclear whether they have actually seen the proposals or the corresponding implementation periods. The author notes that these proposals are still under consideration. The twelfth proposed standing trustee handbook provision, regarding fiduciary expenses, is as follows: 12. Facilities and Equipment The standing trustee shall not loan, lease or sublease to another entity any office space or equipment which has been paid for or acquired with fiduciary expense funds. "Comment" and "Implementation" language is attached to this provision.Same.
NBRC-
0278
Paul G. SwansonDirector, National Assocation of Bankruptcy Trustees (NABT); chapter 7 panel trustee


Panel trustees are losing their independence in cases where their decisions conflict with those of the U.S. Trustee's office. The spector of nonrenewal as retaliation looms large in a trustee's mind and affects the trustee's ability to be independent.Code should be amended to preserve the independence of panel trustees. Also, panel trustees play a major role in the bankruptcy system, and the NBRC should seek out and encourage input from chapter 7 panel trustees through the NABT.
NBRC-
0433
James Lawniczak
Attorney. Memo sent by E-mail, no address given.

For reasons given by Judge Martin, author supports his proposal.Author agrees with Judge Robert Martin's proposal that if a motion to appoint a trustee is made by a creditor, then the burden should be on the debtor in possession to prove that the debtor in possession is properly managing the estate. However, the US Trustee should have no standing under any circumstances to switch the burden of proof.
NBRC-
0434
Robert D. MartinJudge, U.S. Bankruptcy Court, Western District of Wisconsin
1104
Author offers clarifications on his proposal to change §1104 with regard to the appointment of a trustee in Chapter 11. Author notes that the threat of an operating trustee and of losing control would have a salutory effect on the debtor in possession. The modifications to §1104 are modeled on §362 so they are familiar and easy. U.S. Trustee would become a party in interest, not only if reports and fees are late, but also if a filed report showed that wages, taxes and insurance were not current. Author is concerned that his proposed trustee not be confused with a liquidating trustee. His proposal is for the appointment of an operating trustee - typically, an accountant or workout specialist who, if appropriate, would hire attorneys - not the appointment of an attorney experienced in liquidating assets under Chapter 7.
NBRC-
0496
Billy P. SmithPrivate citizen


Author filed for Chapter 7 and feels his case was mishandled by the trustee, and that the trustee then engaged in various unethical acts.No specific solutions proposed.
NBRC-
0533
Geoffrey R. LouisPresident, West Point Federal Credit UnionTwo examples of cases author has been involved in.

Trustees are grossly undercompensated and judges overloaded and indifferent. Sometimes its not economically feasible for small creditors to challenge valuations in the debtor's schedule, and the trustees and judges should be charged with verifying such things.Trustees should "impose personal responsibility and accountability on the debtor, whether or not each individual creditor can afford to protest the filings." Trustees and judges should have the ability "to force conversion of Chapter 7 filings to Chapter 13 when examination of schedules and petitions clearly shows this is appropriate."
NBRC-
0629
Frank M. HensleyPresident, Pioneer Western Investment Associates, Inc., a real estate finance corporation.


"3. Attorneys serving as bankkruptcy trustees are particularly ignorant and inept when it comes to selling estate assets such as the lender' or sellers' interests in mortgages and land contracts." "Lawyers have little knowledge or experinece as investors and simply don't know how to maximize returns from the sale of such assets.""Either trustees should be trained in how to do this or such sales shold be conducted by a centralized court agency with skills in this field."
NBRC-
0646
Royce E. WallaceAttorney, Chapter 13 standing trusteeMemorandum by the author on the Functions of a Standing Chapter 13 Trustee

Author is a Chapter 13 standing trustee and writes "to counter the suggestion the standing trustee function should be one assigned to the United States Trustee." Author has enclosed a memorandum he has written on the standing trustee function.
NBRC-
0710
Franklin FeldmanAttorneyExhibit A - a collection of letters from and to author concerning the enforcement of a Guarantee and legal representation of the company; and, Exhibit B - exchage of letters between author and Michael L. Cook concerning a request for legal fees and a threat of sanctions.

Author invested in company which had filed chapter 11 but which got a new president and CEO whom author thought could turn the company around. Author later became convinced that the CEO had acted in his own best interests, and not those of the company, when the company had to file chapter 11 two more times. Author petitioned for the appointment of a trustee or examiner and was denied, and has been actively involved in the legal procedings of the bankruptcy. Author writes with suggestions for changes in the bankruptcy code based on his experience.If the appointment of a Trustee is to be discretionary with the Bankruptcy Judge, there should be an opportunity for an immediate appeal to a Federal District Court without onerous procedural requirements.
NBRC-
0723
Joseph I. WittmanPresident, National Association of Bankruptcy Trustees (NABT)Proposed Amendment to 11 U.S.C. §324(c)(1) & (2); Comments of the NABT on the EOUST's Draft Administrative Procedures for Chapter 7 Trustees; Draft Administrative Procedures for Chapter 7 Panel Trustees by EOUST; Copy of Regulations dealing with debarment of government contractors;

The NABT has raised a concern of the panel trustees about being removed from rotation or otherwise denied cases without being afforded the opportunity to challenge the action being taken against them by the UST. NABT is concerned that EOUST may publish interim administrative procedures for comment, when EOUST had told NABT there would be further discussion on the procedures.NABT believes that a legislative solution to the issue of due process is needed even if EOUST implements some type of administrative procedures. Author also suggests two sources of procedures which could be used for Chapter 7 and 13 trustees. One of these is "debarrment" procedures dealing with government contractors. A second is the procedures under the Merit Protection Selection Board which applies to federal employees.
NBRC-
0812
Bernard S. Via, IIIAttorney, Via & Frye


Trustee's commissions are too high and amounts are included in the plan which should not be. The additional amount paid to the trustee could be used for unsecured creditors."I think the chapter 13 trustees need to cap their commission at 5% and also if there is no default that the creditor can pay their house payments outside the plan." "House loans should not be inside the plan, only the catching up of the arrearage should be inside the plan."
NBRC-
0822
Ray HendrenStanding Chapter 13 TrusteeList of names; Copy of 28 CFR Part 58, Procedures for Suspension and Removal of Panel Trustees and Standing Trustees; Copy of Memorandum in Support of Amendments to Title 11 to Provide the Right of Judicial Review to Private Trustees.

"The information I have read coming from the Bankruptcy Review Commission appears to state from all parties that Standing Chapter 13 Trustees are doing a good job and we should encourage more attempts for citizens to reorganize and to encourage the use of Chapter 13 trustees and an orderly administration of pay back of debt. No, however, the United States Trustee program is attempted to legislate through the use of the Administrative Procedures Act certain regulations which will deprive private citizens of meaningful due process and affordable judicial review.""I am not sure how the Bankruptcy Review Commission's report meshs with pending bankruptcy legislation. However, I urge you to contact the individuals listed on the separate page and express your support for the private due process legislation."
NBRC-
0829
Joseph I. WittmanPresident, National Association of Bankruptcy TrusteesProposal of a Uniform Standard of Care governing Personal Liability of Bankruptcy Trustees323
Author is submitting a proposal by the NABT for review by the NBRC regarding trustee personal liability. "The standard proposed is that trustees will be personally liable only for 'willful and intentional acts in violation of the trustee's fiduciary duties'. This standard is needed for two reasons. First, it adopts a uniform standard for all districts of the country and in all bankruptcy cases....Secondly, the proposal adopts the majority view of the federal circuits and clarifies this important area where diverse decisions have been reported.""The NABT urges the Commission to consider the adoption of these proposed changes to the Bankruptcy Code, or at least adopt the principle embodied within the proposal of 'willful and intentional' acts."
NBRC-
0906
Joseph I. WittmanPresident, National Association of Bankruptcy TrusteesCopy of Federal Register Vol. 62, No. 100, Friday, May 23, 1997 dealing with Proposed Rules for suspension and Removal of Panel Trustees and Standing Trustees.324
Author writes about the promulgation of rules by the Executive Office of the United States Trustee dealing with the suspension and removal of Panel Trustees and Standing Trustees. The NABT feels that these rules still do not take their due process concerns fully into account."Only a legislative change to Section 324 will address the problem.
NBRC-
0929
David LeibowitzAttorney, Freeborn & Peters


Author has "identified two factors which are critical to success in chapter 11 regardless of the size of the case but particularly important in smaller cases. The first is minimization of time in chapter 11, thus lowering transaction costs and uncertainty. The second is correction of the management flaws of operational difficulties which led to debtor's failure in the firs place. Success in chapter 11 requires a change fromt he status quo. The Bankruptcy Code and associated procedures should encourage change necessary for success." Author feels that the Working Group's proposal is generally sound, but would suggest two changes in philosophy with the view of facilitating a greater likelihood of success in chapter 11. The second is the need for change. The Bankruptcy Code should facilitate management and operational improvements in a debtor.Existing management knows the business and should stay in place, unless there are overriding reasons to appoint a trustee to replace management. "Instead, where the 'bright line' signs of failure exist, the Bankruptcy Code should encourage the appointment of an interim trustee with powers to force the debtor to (a) analyze the business, (b) determine the causes for failure and (c) assist the debtor in chanaging that which can be changed.."
NBRC-
0950
Mary Lou WooChapter 7 Bankruptcy Panel Trustee


Author is concerned that the proposed rules dealing with the suspension and removal of Panel and Standing Trustees does not provide for a "Right to Hearing."See above.
NBRC-
0974
Joseph I. WittmanPresident, National Association of Bankruptcy TrusteesComments of the National Association of Bankruptcy Trustees on the proposed procedures for Suspension and Removal of Panel Trustees and Standing Trustees.324
"NABT still believes that legislative action is necessary to correct the absence of meaningful due process for bankruptcy trustees. While the proposed administrative procedures are an improvement on what existed before these administrative procedures were published, they still fall short of meaningful due process.""...we urge the Commission to propose a change to Section 324, which we have given to you to provide the following: prior notice of action by the UST; a 'for cause' standard for removal or non reappointment; and review by the Bankruptcy Court."
NBRC-
1021
Joseph I. WittmanPresident, National Association of Bankruptcy Trustees


Author is unclear as to the import of the proposal for peer review contained in the proposal dated July 30, 1997 dealing with the United States Trustee Program. "NABT believes that a 'peer review' procedure which is implemented as a substitute for the administrative procedures dreaged by the EOUST would be helpful. However, 'peer review' as an adjunct to the proposed administrative procedures would mean that a trustee must pass through 'two' gauntlets in having an adverse decision of the EOUST reviewed." The Commission needs to clarify what type of review is available. The Commission report makes no reference to due process, which has been urged by NABT. This due process should include the principals of: prior notice of adverse action; a 'for cause' standard; and, review by the bankruptcy court."NABT urges the Commission to not adopt the portion of the UST proposal which addresses peer review unless the Commission addresses the above concepts which are part of DUE PROCESS which are not mentioned anywhere in the Commission's proposal."
NBRC-
1029
Stewart WaintroobCreditor in bankruptcy


Author owned a business which he sold to someone who then went bankrupt. Author feels that the trustee did not look out for the creditor's interests, especially with regard to the sale of the debtor's home, which had substantial equity above the exemption, and with regard to a house which was sold with a recovery of $15,000 equity which was used up in the payment of the realtor and trustee's fees.None.
NBRC-
1073
Paul James ToscanoAttorney; Standing Chapter 13 Trustee for the District of Utah


Author writes in a facetious manner of his admiration for the EOUST and its ability to consolidate all power in removing trustees without review through the proposed Regulaton Relating to the Bankruptcy Reform Acts of 1976 and 1994.
NBRC-
1074
Karen CordryBankruptcy Counsel, National Association of Attorneys General


Author is "concerned about a standard that releases the trustee from any liability for an action taken within the scope of his duties, so long as there initially was 'full disclosure'."No specific solution proposed.
NBRC-
1102
Ronald J. SilvermanHebb & Gitlin


Author writes in support of the Liability Standard proposed by Professor King and Elizabeth Holland for bankruptcy trustees. Author notes that bankruptcy examiners serve for the benefit of the bankruptcy estate just as trustees, and may be exposed to the same liabilities.The Liability Standard should be enacted to apply to bankruptcy examiners as well as bankruptcy trustees.



 

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