The U.S. Trustee: The Rodney Dangerfield of the Bankruptcy System

By Moses, Max G.; Bernstein, Robert S. | Business Credit, October 1996 | Go to article overview
Save to active project

The U.S. Trustee: The Rodney Dangerfield of the Bankruptcy System

Moses, Max G., Bernstein, Robert S., Business Credit

Virtually every bankruptcy case in the United States is touched by the U.S. Trustee. The U.S. Trustee Program exists in every jurisdiction (except Alabama and North Carolina). U.S. Trustees have some responsibility in every Chapter 7, 11, 12 or 13 bankruptcy case, yet their activities are not often discussed in current bankruptcy literature, and like Rodney Dangerfield, they get no respect.

Created under the Bankruptcy Reform Act of 1978 as a pilot program in 10 judicial districts, the U.S. Trustee system was designed to allow bankruptcy judges to handle judicial functions without being burdened by administrative tasks. Perhaps more significantly, this new bureaucracy was intended to eliminate potential conflicts of interest that existed prior to the 1978 code. For example, private trustees, who had the responsibility to liquidate and manage a debtor's assets, were appointed by bankruptcy judges. Subsequently, these trustees might subsequently need to appear before the very same judge who appointed them as advocates on issues which required that judge to make rulings.

New Structure Set by Law

This pilot program was scrutinized during its first five years of existence. When Congress passed the Bankruptcy Amendments Act of 1984, the program's life was extended from its original 1984 expiration date to 1986. Finally, with the passage of the Bankruptcy Judges, United States Trustees and Family Farmer Bankruptcy Act of 1986, the system was expanded to 48 of the 50 states. Over the ensuing two years, the permanent national program was phased in and 21 regional U.S. Trustees were appointed by the U.S. Attorney General, each for initial terms of 5 years.

Alabama and North Carolina were excluded and use the Bankruptcy Administrator Program. Current law provides for the Bankruptcy Administrator Program to continue until the year 2002. However, S1559, the Bankruptcy Technical Amendments Act of 1995, which passed the U.S. Senate late in July of this year, would extend the program until 2012. Of concern is the 1994 9th Circuit Court of Appeals decision (St. Angelo vs Victoria Farms, Inc., 38 F. 3rd 1525), which found the statute that delayed the effective date for the entry of Alabama and North Carolina into the U.S. Trustee system to be unconstitutional because it violates the uniformity clause of the U.S. Constitution.

Although there is an Executive Office for U.S. Trustees (EOUST) in the Department of Justice (and the director has the right to appoint the regional U.S. Trustees as well as issue operative guidelines), the reality is that each regional U.S. Trustee exercises an immense amount of power. As a result, the system has become rather fragmented, and it sometimes seems that the one consistent thing about the U.S. Trustee system is its inconsistency.

The U.S. Trustees: Power and Criticism

In light of the power of the U.S. Trustees, it is no wonder that there has been a significant amount of criticism of the system and the individuals working within it. It is also not surprising that Congress has held at least five separate oversight hearings about the U.S. Trustee system in the last three years, the most recent in July of this year. Because of the U.S. Trustee's potential impact on fee requests, it is also not surprising that the vast majority of professionals would rather not comment publicly about the system or the individual U.S. Trustees for fear of retribution in the form of removal from the panel of private trustees, reduction in appointments or increased scrutiny of fee applications.

The Merit System Versus Political Appointments

As a general rule, those who like the system are those who have a cordial working relationship with their individual regional U.S. Trustee. It is these same people who have been most vocal in seeking to keep partisan politics out of the process for appointing regional U.S. Trustees. They have suggested strongly that a merit system be used and that those regional U.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

The U.S. Trustee: The Rodney Dangerfield of the Bankruptcy System


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?