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West Palm Beach Bankruptcy & Business Attorneys > > Bankruptcy Attorneys > What Are the Duties of a Debtor in Possession?

What Are the Duties of a Debtor in Possession?


When a debtor files a petition for Chapter 11 bankruptcy, the debtor becomes a “debtor in possession.” As a debtor in possession, the debtor must undertake additional fiduciary duties and responsibilities set forth under US bankruptcy law — these duties and responsibilities are beyond those that an individual debtor has in a traditional Chapter 7 bankruptcy or Chapter 13 bankruptcy case. If you or your business are filing for Chapter 11 bankruptcy, it is essential to understand the duties and responsibilities of a debtor in possession. What must the debtor do? What must the debtor avoid doing? Our West Palm Beach bankruptcy lawyers can provide you with more general information about the duties of a debtor in possession, and we can work with you on your Chapter 11 bankruptcy case.

What is a Debtor in Possession? 

To understand the duties and responsibilities of a debtor in possession, it is essential to understand what this term means. According to the Legal Information Institute (LII), a debtor in possession “is an individual or corporation that has filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code and holds property or assets which can be used to satisfy creditor claims. The debtor in possession may continue to do business using those assets to maintain the asset productivity, but the debtor is doing so on behalf of creditors.”

What does that mean? In short, the debtor in a Chapter 11 case, as a debtor in possession, functions like a bankruptcy trustee and has the fiduciary duties of a trustee.

Responsibilities and Duties of a Debtor in Possession 

As a debtor in possession, what must a Chapter 11 debtor do in order to be in compliance with all relevant bankruptcy laws? It is important to discuss the specifics of your case with your West Palm Beach bankruptcy attorney, but generally speaking, duties include:

  • Maintain the bankruptcy estate;
  • Close and reopen bank account(s) as debtor in possession;
  • Operate the business of the debtor efficiently to ensure that payments are made to creditors according to the terms of the repayment plan; and
  • Operate the business of the debtor efficiently to remain current on any debts incurred after the filing of the bankruptcy petition.

It is essential for the debtor in possession to understand that Chapter 11 cases are separate from other types of bankruptcy cases when it comes to property acquired after the date of filing for bankruptcy — this property is included as part of the bankruptcy estate. It is also critical to understand the fee schedule and to ensure that all quarterly fees are paid.

Contact Our West Palm Beach Bankruptcy Attorneys Today 

Chapter 11 bankruptcy cases are extremely complicated, and it is important to have an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller on your side throughout your case. If you have any questions about Chapter 11 bankruptcy before filing, or if you are ready to file as an individual or a business, our firm is here to help. Contact us today to learn more about the bankruptcy services we provide to individuals and businesses alike in South Florida.




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