In fact, according to the Federal Judiciary's website the trustee is an impartial administrator, http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html, "When an individual files a chapter 13 petition, an impartial trustee is appointed to administer the case. 11U.S.C. § 1302." However, §1302 goes further by stating that "Subsection (b)(1) makes it clear that the chapter 13 trustee is no mere disbursing agent of the monies paid to him by the debtor under the plan [section 1322(a)(1)], by imposing upon him certain relevant duties of a liquidation trustee prescribed by section 704 of this title". 11 U.S.C.A. §1302.

In essence, §1302 establishes the duties of a chapter 13 trustee and through §1302(b)(1) incorporates certain duties of a liquidation trustee through §704. Neither §1302 nor §704 establishes the trustee's right or duty to file a response on behalf of creditors as relates to an objection to claim. In fact, §1302(b)(2) demands the trustee's appearance at certain hearings that relate to (A) the value of property subject to a lien; (B) confirmation of a plan; or (C) modification of the plan after confirmation but remains silent as to objections to claim except for reviewing and objecting to improper proofs of claims.

11 U.S.C. §1302(a)(1) incorporates §704 into the trustee's duties. More specifically as it relates to claim objections §704(a)(5) is as follows:

§704. Duties of trustee

(a) The trustee shall--

(5) if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper

It appears that Congress had the intention of allowing chapter 13 trustees as well as chapter 7 trustees the ability to file objections to improper proofs of claims on behalf of the bankruptcy estate. It would be an unintended expansion of the Bankruptcy Code provision to read into it the ability to file a response on behalf of creditors or to represent creditors in any capacity.

If the trustee's intentions were not to file an answer on behalf of the creditors but to merely file a response stating their opinion as to the validity or sufficiency of each claim, then it would seem that the chapter 13 standing trustee would be attempting to expand their role in the code provision which was not intended by Congress.

This would increase litigation by forcing all claim objections to hearing if the trustee disagreed with debtors as to the validity or sufficiency of a claim. Congress specifically set out in F.R.B.P. 3001(f) that "a proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim." Therefore, absent an objection by a party in interest, the claim would pass through the system unchallenged.

A need for trustee approval does not exist as defined by Congress. Additionally, if an objection is filed, an opposing party is required to file an answer and/or attend the hearing at which point the Court would rule as to the validity or sufficiency of the claim; again, trustee approval is not necessary. By allowing a trustee to file an "opinion" answer the court would be greatly expanding the duties of the trustee and increasing unnecessary litigation.

If the debtor files an objection to claim and the creditor does not attend the hearing to litigate the issue the trustee is stepping into the "shoes" of the creditor which is in direct conflict with the duties as a representative of the bankruptcy estate. Congress only allows the trustee, via §704(a)(5) the duty to review and object to improper claims filed against the bankruptcy estate.

Furthermore, if the Court were to expand the role of the trustee it seems that it would cause a conflict of interest not intended by Congress. Congress specifically sets out the trustee's capacity as it relates to the bankruptcy context in 11 U.S.C. §323.

11 U.S.C. §323 establishes the role and capacity of the trustee as follows:

As an impartial representative of the bankruptcy estate, it is a conflict of interest if the trustee is capable of filing a response or answer on behalf of any creditor in addition to the duty to object to improper proofs of claims.

There would also be a conflict of interest if the trustee is capable of filing a response in furtherance of its own agenda. To file a response because objections to claims reduce the amount of fees the trustee can charge is in direct conflict with the trustee's duty as an impartial representative of the bankruptcy estate as contemplated by 11U.S.C. §323.

The Bankruptcy Code does not state that the trustee is the representative of itself or its financial future but of the bankruptcy estate. Theoretically, the trustee could "overlook" certain borderline improper claims if its financial future were strained or in danger which would result in a breach of fiduciary duty to the bankruptcy estate.

Further, F.R.B.P. 2018 specifically states who may be heard on behalf of consumer creditors. F.R.B.P. 2018 is as follows:

In a chapter 7, 11, 12, or 13 case, the Attorney General of a State may appear and be heard on behalf of consumer creditors if the court determines the appearance is in the public interest, but the Attorney General may not appeal from any judgment, order, or decree in the case.

Additionally, if a trustee files a response on behalf of creditors they did it in direct contravention to F.R.B.P. 9010, that contemplates the representation of parties:

In conclusion, the Bankruptcy Code does not permit a trustee to either file a response on behalf of the creditors or an "opinion" response regarding claim objections. The Bankruptcy Code creates a system where the trustee represents the bankruptcy estate and those interests alone. The trustee has a financial interest in whether a claim is allowed or disallowed and Congress has, through several specific code sections, limited the trustee's involvement in the claims objection process.

Congress specifically set out a provision on appropriate times the trustee would become involved in the objection process by reviewing and objecting to improper proofs of claims. The trustee's main directive is to impartially administer the bankruptcy case and represent the bankruptcy estate.

Congress did not intend for the trustee to have all inclusive powers over every aspect of the bankruptcy process. To that end, Congress set up a series of limiting provisions on the trustees involvement.

by Eric A. Maskell, Law Office of Eric A. Maskell, www.ericmaskell.com