Application for Bankruptcy is filed against an individual or a partnership firm if the resolution plan for an individual does not succeed, in case of pending debt. The application may be filed by the Debtor itself as given under section 122 of the IBC code or by the creditor under section 123 of the IBC code. Both, creditors and the debtor have the right to appoint an insolvency resolution professional as the bankruptcy trustee for the purpose of bankruptcy proceedings.
Bankruptcy trustees are the ones dealing with complex situations that can arise when someone becomes insolvent. The trustee in bankruptcy effectively takes control of the assets distributes proceeds to creditors, according to the law.
A bankrupt person’s assets which may be land, building, cash, or other such assets are taken into custody by the trustee. All these assets together refer to “estate” and shall be distributed to pay off the debts. Once the legal appointment through the adjudicating authority of the bankruptcy trustee is approved, the bankruptcy trustee is responsible and handed over the complete estate.
With the experience of an insolvency professional, ASC is capable to arrange insolvency professionals to act as bankruptcy trustees.
A bankruptcy trustee is an appointed person or a firm that deals with complex financial situations involving the insolvency of a particular organisation or person. They take control of the assets and undertake their distribution to the creditors and stakeholders in terms of the provisions of the law.
In case a resolution plan does not succeed, a trustee in bankruptcy case is appointed. The need of bankruptcy trustees can be emphasised by the fact that they are vested with powers in case of insolvency matters. They are handed over the complete estate of the insolvent and are responsible to ensure that it is judiciously distributed to the stakeholders.
Bankruptcy trustees are entrusted with multiple powers in relation to insolvency matters. The powers of bankruptcy trustees include the power to hold property, enter contracts, sue or be sued, investigate the bankruptcy matter, distribute the estate, enter into compromise arrangements, sell any property, appoint any agent etc.
Both the creditors and the debtors have the power to appoint the insolvency resolution professional as their trustee in bankruptcy case. The appointment of the bankruptcy trustee should be approved by the adjudicating authority.
The role of a bankruptcy trustee is to administer a bankruptcy case and act as a liaison between the debtor and the creditors. Their responsibilities may include:
The primary function of bankruptcy is to provide individuals or businesses with a legal process to eliminate or repay their debts and get a fresh financial start. Bankruptcy can help debtors to:
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