Role of the U.S. Trustee/Bankruptcy Administrator

The importance of  the U.S. Trustee Program or Bankruptcy Administrator is less in the administration of a Chapter 9 bankruptcy case filed by a municipality than under Chapter 11.  Under Chapter 9, the administration of a bankruptcy case is primarily focused on:

  • Determining if the municipal debtor is actually permitted to file a petition under chapter 9;
  • Determining if the reorganization plan filed by the municipality debtor should be confirmed; and
  • Successful implementation of the confirmed reorganization plan.

In Chapter 9, the U.S. Trustee or Bankruptcy Administrator has:

  • Authority to appoint a creditors’ committee as similar to Chapter 11 bankruptcy procedure;
  • No authority to examine a municipal debtor representative in a creditors’ committee meeting. In other words, section 341 of the Bankruptcy Code is not applicable in Chapter 9 bankruptcy cases;
  • No statutory authority to appoint a U.S. Trustee or Examiner in a Chapter 9 bankruptcy case.  In other words, sections 701, 702, 703, 1104, 1202, and 1302 of the Bankruptcy Code is not applicable in Chapter 9 bankruptcy cases ;
  • No statutory authority to convert a Chapter 9 bankruptcy case to any other chapter.  In other words, under Chapter 7 sections 1112, 1208 and 1307 of the Bankruptcy Code is not applicable in Chapter 9 bankruptcy cases ;
  • No statutory duty to control bankruptcy case administration.  In other words, Chapter 9 bankruptcy case administration is not a statutory duty of a U.S. Trustee or Bankruptcy Administrator;
  • No statutory authority to monitor the financial operations of the municipal debtor or to evaluate the professional fees incurred by the municipal debtor’s experts.  In other words, the provisions of the Bankruptcy Code sections 327 to 331 regarding debtor’s retention and payment of bankruptcy professionals is not applicable in a Chapter 9 bankruptcy case.  In a Chapter 9 bankruptcy case, the court reviews the reasonableness of the municipal debtor’s professional fees in conjunction with reorganization plan confirmation.

The limited role of the U.S. Trustee or Bankruptcy Administrator in Chapter 9 eliminates the potential for actual or identified interference with the sovereign supremacy of the states.


Inside Role of the U.S. Trustee/Bankruptcy Administrator