It might be difficult for business owners in Hackettstown to consider filing for bankruptcy simply because they do not want to lose control of their companies. Even in situations where a Chapter 11 case could help alleviate their financial struggles and allow their operations to continue, the thought of the use of their business assets and properties being at the discretion of an outside party (such as a bankruptcy trustee) may be enough to scare them away from the process altogether. Those same business owners will likely be relieved to know that law allows them to retain control of their bankruptcy cases through the role of the “debtor in possession.”
According to Section 1101(1) of Chapter 11 of the U.S. Bankruptcy Code (as shared by the Cornell Law School), a debtor in possession is a debtor that acts in the role of the trustee in his or her bankruptcy case. This allows business owners to manage their cases on their own provided they meet the requirements set by the bankruptcy court. In reality, bankruptcy trustees are only appointed in a limited number of Chapter 11 cases.
A debtor in possession has many of the same rights and powers as a traditional bankruptcy trustee. With the courts approval, he or she can employ a number of different resources to assist with developing a reorganization plan and meeting the obligations of his or her case. However, with these rights also come responsibilities. The website for the United States Courts lists those to be:
- Accounting for all property comprising the bankruptcy estate
- Reviewing creditors’ claims (and objecting to them, when necessary)
- Filing all required documentation relative to the case
Such documentation may include inventories and appraisals, as well as tax returns. All the while, the business owner is allowed to continue to run his or her company.