bankruptcy rule 1104A
Appointment or Election of a Case Trustee
Although the appointment of a case trustee is a rarity in a chapter 11 case, a party in interest or the U.S. trustee can request the appointment of a case trustee or examiner at any time prior to confirmation in a chapter 11 case. The court, on motion by a party in interest or the U.S. trustee and after notice and hearing, shall order the appointment of a case trustee for cause, including fraud, dishonesty, incompetence, or gross mismanagement, or if such an appointment is in the interest of creditors, any equity security holders, and other interests of the estate. 11 U.S.C. § 1104(a). Moreover, the U.S. trustee is required to move for appointment of a trustee if there are reasonable grounds to believe that any of the parties in control of the debtor "participated in actual fraud, dishonesty or criminal conduct in the management of the debtor or the debtor's financial reporting." 11 U.S.C. § 1104(e). The trustee is appointed by the U.S. trustee, after consultation with parties in interest and subject to the court's approval. Fed. R. Bankr. P. 2007.1. Alternatively, a trustee in a case may be elected if a party in interest requests the election of a trustee within 30 days after the court orders the appointment of a trustee. In that instance, the U.S. trustee convenes a meeting of creditors for the purpose of electing a person to serve as trustee in the case. 11 U.S.C. § 1104(b).
The case trustee is responsible for management of the property of the estate, operation of the debtor's business, and, if appropriate, the filing of a plan of reorganization. Section 1106 of the Bankruptcy Code requires the trustee to file a plan "as soon as practicable" or, alternatively, to file a report explaining why a plan will not be filed or to recommend that the case be converted to another chapter or dismissed. 11 U.S.C. § 1106(a)(5).
Upon the request of a party in interest or the U.S. trustee, the court may terminate the trustee's appointment and restore the debtor in possession to management of bankruptcy estate at any time before confirmation.11 U.S.C. § 1105.
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ORDER DIRECTING THE APPOINTMENT OF CHAPTER 11 TRUSTEE
Upon the application of Tracy Hope Davis, the Acting United States Trustee for Region 2, for an order directing the appointment of a Chapter 11 Trustee or, in the alternative, converting the case to Chapter 7 (the “United States Trustee Motion”), and this Court having entered an order to show cause with respect to the United States Trustee Motion on July __, 2010, and no objections having been interposed, and after due notice and a hearing on July __, 2010, and it appearing that cause exists for the appointment of a Chapter 11 Trustee pursuant to 11 U.S.C. §1104(a)(1) and that the appointment of a trustee is in the best interest of creditors of the estate pursuant to 11 U.S.C. §1104(a)(2) and the debtor having consented; it is hereby
SMB 7/19/10
ORDERED, that the United States Trustee immediately appoint a Chapter 11 Trustee, with all of the powers authorized under 11 U.S.C. § 1104.
Dated: New York, New York
July 19, 2010
STUART M. BERNSTEIN
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