Of all bankruptcy types, Chapter 11 Fiduciary Duties Are The Most Extensive
In these bankruptcy types, corporations, partnerships, sole proprietors and individuals are permitted to be a debtor-in-possession under Chapter 11 bankruptcy laws, according to 11 U.S.C. 1107. In the most basic sense, the term "debtor-in-possession" refers to the debtors retention of rights, duties and responsibilities which are similar to the duties of a court appointed trustee in a case filed under Chapter 13. For more information, see:
Other bankruptcy types and fiduciary duties
Of all bankruptcy types, Chapter 11 is unique in creating fiduciary duties. A fiduciary is a person or organization that holds property for another subject to clearly defined responsibilities. A debtor-in-possession becomes a fiduciary in these bankruptcy types, for the debtor's estate, and retains possession of all property. Debtors s in these bankruptcy types are also charged with an affirmative duty to protect the interests of creditors, according to 11 U.S.C. Sec. 1106 and Sec. 1107.
Fiduciary duties in Chapter 11 cases include accounting for assets and liabilities, objecting to questionable claims, filing legal disclosures required by the code, and submitting operating reports to the Court. As manger of continuing business operations, a debtor-in-possession must also file tax returns, maintain books and records, pay debts, and oversee day to day business in a reasonable manner. For more information on bankruptcy types, navigate to the Bankruptcy Types topic.
