341 Meeting

INTRODUCTION

In this article, we will:

  • Discuss the 341 meeting, its purpose and function in the bankruptcy process;
  • Review the key players;
  • Learn about the logistics of a 341 meeting;
  • Explore common client questions about the 341 meeting;
  • Review questions of the trustee at the 341 meeting;

Planning the 341 Meeting

PURPOSE OF THE MEETING

  • Review of 11 U.S.C. 341
  • (a) Within a reasonable time after the order for relief in a case under this title, the United States trustee shall convene and preside at a meeting of creditors.
  • (b) The United States trustee may convene a meeting of any equity security holders.

PURPOSE OF THE MEETING CONTINUED

  • Review of 11 U.S.C. 341
  • (c) The court may not preside at, and may not attend, any meeting under this section including any final meeting of creditors. Nothwithstanding any local court rule, provision of a State constitution, any otherwise applicable nonbankruptcy law, or any other requirement that representation at the meeting of creditors under subsection (a) be by an attorney, a creditor holding a consumer debt or any representative of the creditor (which may include an entity or an employee of an entity and may be a representative for more than 1 creditor) shall be permitted to appear at and participate in the meeting of creditors in a case under chapter 7 or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at any meeting of creditors.

 

PURPOSE OF THE MEETING CONTINUED

  • Review of 11 U.S.C. 341
  • (d) Prior to the conclusion of the meeting of creditors or equity security holders, the trustee shall orally examine the debtor to ensure that the debtor in a case under chapter 7 of this title is aware of – (1) the potential consequences of seeking a discharge in bankruptcy, including the effects on credit history; (2) the debtor’s ability to file a petition under a different chapter of this title; (3) the effect of receiving a discharge of debts under this title; and (4) the effect of reaffirming a debt, including the debtor’s knowledge of the provisions of section 524(d) of this title.

PURPOSE OF THE MEETING CONTINUED

  • To summarize, Section 341 means:
  • The U.S. trustee is responsible for the 341 meeting process.
  • The bankruptcy court judge does not participate in the meeting and may not attend the meeting.
  • Creditors need not be represented by counsel at 341 meetings to participate; an employee or agent of the entity can appear on its behalf either with or without an attorney.
  • Congress wanted the Debtor to have an awareness of consequences of filing bankruptcy, the different types of bankruptcy options available and the effects of reaffirmation.

 

WHO SHOULD ATTEND THE 341 MEETING?

  • All creditors/parties in interest receive notice of the meeting.
  • Mandatory appearances include:
  • The trustee;
  • Your client (the Debtor); and
  • You (the Debtor’s attorney).
  • As noted in 11 U.S.C. 341, creditors and parties in interest have the right to attend a meeting and ask relevant questions, however, in most cases creditors do not attend 341 meetings.
  • When they do appear, it is often in more complicated cases involving small businesses, in cases where a creditor has liens or security interests in multiple assets, in cases of a recent divorce or acrimonious family law action or small creditors who have no knowledge of the bankruptcy process (“Ma & Pa creditors”).

WHO SHOULD ATTEND THE 341 MEETING CONTINUED

  • Attendance by others:
  • Some clients feel the need to bring a close friend or family member for emotional support, but, caution should be given to the client that only person who can give testimony is the client alone.
  • If your clients have young children, it is advisable that your clients make arrangements for the children for the 341 meeting, if at all possible. While most trustees are understanding about a childcare predicament, trustees record the meetings and want to see that the recording is clear and without as much distraction as possible. In addition, if the trustee is running behind on the calendar there may be a longer than expected wait for the meting. Children without quiet toys or snacks to entertain them in the short term will interfere with the trustee’s recording.
  • To summarize, limit the entourage!

 

WHO SHOULD ATTEND THE 341 MEETING CONTINUED

  • Other information:
  • If the case is a business filing, the person who signed the Petition and Schedules on behalf of the business should plan to attend as well as any other person with knowledge of the financial/business activities in the months leading up to the bankruptcy.
  • 341 meetings are public and anyone can attend – nosy neighbors, ex- business partners, former friends – and may include an attorney representing the U.S. trustee. He or she may have questions for your client and may have document requests of your client. Be prepared for that and prepare for your client for the possibility!

WHO SHOULD ATTEND THE 341 MEETING CONTINUED

  • Practice Pointer:
  • If you are new to the bankruptcy practice or are considering practicing in this area, attend some 341 meetings and observe. Plan to spend a morning or afternoon watching the meetings – you are likely to get a good cross-section of meetings – some simple cases and some more complex. If you have multiple trustees in your district, you might consider observing meetings with a few trustees. While the questions are likely very similar between all trustees, there are style differences and personality differences that might be helpful to know and relay to your client depending on your client’s disposition.

 

WHO IS THE BANKRUPTCY TRUSTEE?

  • In bankruptcy, the trustee is most commonly an attorney (although there are some bankruptcy trustees who are not attorneys but come from a financial background – accountants/CPAs), who has been appointed by the United States Department of Justice to administer bankruptcy cases.
  • All trustees undergo extensive background checks and are subject to background rechecks. They act as fiduciaries to the bankruptcy estate which includes creditors and your client.

 

PURPOSE OF THE MEETING CONTINUED

WHO IS THE BANKRUPTCY TRUSTEE CONTINUED

  • The chapter 7 trustee’s role in your client’s case is to:
  • (a) ensure that your client has complied with the mandates of the Bankruptcy Code;
  • (b) locate assets that have value above both liens and exemptions claimed therein and liquidate those assets;
  • (c) discover claims or litigation that can be brought, continued or pursued for the benefit of the bankruptcy estate; and
  • (d) close the bankruptcy estate as expeditiously as possible.
  • Contrary to what you (or your client) might think, the trustee does not sit around her office trying to find new and inventive ways to make your life and that of your client, more difficult.

WHO IS THE BANKRUPTCY TRUSTEE CONTINUED

  • The chapter 13 trustee’s role in your client’s case is to:
  • (a) ensure that your client has complied with the mandates of the Bankruptcy Code;
  • (b) locate assets that have value above both liens and exemptions claimed therein and verify that the value of those assets are being paid into your client’s plan for his creditors;
  • (c) discover claims or litigation that can be brought, continued or pursued for the benefit of the bankruptcy estate;
  • (d) receive all disposable income from your client and distribute it to creditors in accordance with his chapter 13 plan.

 

WHO IS THE BANKRUPTCY TRUSTEE CONTINUED

  • Practice Pointers:
  • Make sure your client understands who the trustee is and what her role is in the bankruptcy system and your client’s case.
  • The trustee should be treated with a high level of respect.
  • Do not insult the trustee or put her down. Your client will (or should) follow your lead.
  • The trustee controls the 341 meeting, the meeting room and the tone of the meeting. Explain that to your client in advance and your client will be more at ease for the 341 meeting.

PREPARING FOR THE 341 MEETING

  • Questions your clients will likely have:
  • What should I wear?
  • What should I bring?
  • Where is the meeting?
  • What time do I need to arrive at?
  • Will you be there with me?

 

PREPARING FOR THE 341 MEETING CONTINUED

  • Review of questions commonly asked by chapter 7 trustees.
  • Review of questions commonly asked by chapter 13 trustees.
  • Tips to give your client for the 341 meeting.
  • What happens at the end of the meeting?

PREPARING FOR THE 341 MEETING CONTINUED

  • Practice Pointers:
  • When you prepare your client for the 341 meeting, you should be as hard or harder on them than the trustee or U.S. trustee will be.
  • Push your client for answers if you receive responses that are equivocal – demand truthfulness.
  • Neither you nor your clients want to be embarrassed at the 341 meeting and it is always better to learn about that undisclosed asset before the 341 meeting than to hear about it at the 341 meeting.

 

 

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *