Bankruptcy Key Areas

San Antonio Bankruptcy Trustee

What Does a Chapter 7 Trustee Do?

A Chapter 7 Bankruptcy Trustee administers Chapter 7 bankruptcy estates by investigating, gathering and selling non-exempt estate assets in order to pay creditors in the order and priority set forth in the Bankruptcy Code. For 13 years, San Antonio Bankruptcy Attorney Martin Seidler, administered thousands of Chapter 7 bankruptcy cases in San Antonio, Austin and Del Rio as a Chapter 7 Panel Trustee both under the Administrative Office of the United States Courts and later under the Office of the United States Trustee, a component of the U.S. Department of Justice.

What Are a Chapter 7 Trustee’s Powers?

A Chapter 7 Trustee has the power to avoid preferential and fraudulent transfers of assets of bankruptcy debtors’ estates and to recover them for the benefit of creditors. An avoidable preference is generally a payment or transfer of property made on account of a past due antecedent debt within 90 days prior to a bankruptcy filing or within 1 year of a bankruptcy filing in the case of an insider. A business debtor’s payment of a past due account receivable within 90 days of his bankruptcy filing may be an avoidable preference.

A Chapter 7 Trustee also has the power to avoid fraudulent transfers. A “fraudulent” transfer is one made within two years of a bankruptcy filing where the debtor voluntarily or involuntarily transfers his property for less than adequate consideration or is made with the intent to hinder,delay or to defraud a creditor.

Bankruptcy Trustees also have the power to request that the Court force the debtor to file accurate schedules and account for assets and liabilities. The Trustee can ask the Court to deny the debtor’s discharge if the debtor fails to comply with his duties under the Bankruptcy Code, including but not limited to the duty to keep full and accurate records, the duty to make full disclosure and to tell the truth under oath, the duty not to make pre-bankruptcy transfers with the intent to hinder delay to to defraud creditors.

In the case of Seidler v. Fernandez, the Court of Appeals for the Fifth Circuit upheld the Bankruptcy Court’s denial of the debtor jeweler’s discharge based upon Bankruptcy Trustee Martin Seidler’s complaint that the debtor could not account for thousands of dollars in gold and silver inventory which disappeared prior to the debtor’s bankruptcy filing. The debtor also was found to have made false oaths by misrepresenting the estate’s assets and their disposition. The debtor had pledged what he represented to be hundreds of thousands of dollars worth of diamonds to a local bank as collateral for a large loan. He listed the diamonds on his bankruptcy schedules. When Bankruptcy Trustee Martin Seidler broke open the debtor’s safe deposit box, he found only cubic zirconium replicas and no genuine diamonds. The debtor took the “Fifth” and refused to testify as to what happened to the original stones. This was just one of the grounds upon which his discharge was denied.