TRUSTEE IN BANKRUPTCY Meaning and
Definition
-
A trustee in bankruptcy refers to an individual or entity that is appointed to oversee and administer the affairs of a bankrupt person or company. When an individual or company becomes bankrupt, their assets and debts are placed under the control of this trustee, who acts as an impartial party, responsible for ensuring the fair distribution of assets to creditors and managing the overall bankruptcy process.
The primary role of a trustee in bankruptcy is to collect and assess the debtor's assets and determine the value of these assets. They also have the authority to sell these assets in order to generate funds to repay the creditors. Additionally, the trustee is responsible for examining the debtor's financial records, investigating the reasons behind the bankruptcy, and determining if any fraudulent activities were involved.
Furthermore, the trustee in bankruptcy is responsible for distributing the available funds to the creditors according to a predetermined order of priority, as prescribed by bankruptcy laws. They ensure that creditors with higher priority, such as secured creditors and employees, receive their due amounts first before distributing the remaining funds to unsecured creditors.
The trustee in bankruptcy plays a crucial role in managing the bankruptcy process and maximizing the recovery of funds for creditors. They must act impartially, adhering to the applicable laws and regulations governing bankruptcy proceedings, to ensure a fair and transparent resolution for all parties involved.
