Subchapter V Trustee Duties: Facilitation Conflicts With Other Statutory Duties

Rainbow—a spectrum of light (photo by Marilyn Swanson)

By: Donald L Swanson

The [Subchapter V] Trustee shall— . . . facilitate the development of a consensual plan of reorganization.”  11 U.S.C. § 1183(b)(7).

Facilitation is a mediator-like tool that can be used by every bankruptcy trustee in every case. 

Conflicting Duties

For Subchapter V trustees, however, facilitation is a statutory duty that also creates a tension in every case.  The tension is this: every Subchapter V trustee has statutory duties that conflict with each other.  Here’s how:

  • On the one hand, there is a mediator-like duty—to “facilitate the development of a consensual plan”; and
  • On the other hand, there are substantive duties—like appearing and being heard on plan confirmation and, in appropriate circumstances, objecting to claims or discharge.

In other words, every Subchapter V trustee in every case has both, (i) a statutory mediator-like duty, and (ii) by statute, a dog in the hunt on a variety of substantive issues.

The problem is this: under mediation theory, everyone agrees . . . and I mean everyone . . . that a mediator must not have a dog in the hunt.

Mediation Spectrum

Let’s stipulate that there is a wide range of alternative dispute resolution processes—commonly referred to as “mediation”—that vary dramatically.

Imagine a spectrum of mediation-like tools, ranging from mediation by a totally-passive mediator on one end and an arbitrator on the other.   

On this spectrum, mediation-like tools are separated by the degree of evaluation provided:

  • a passive mediator (on one end) merely helps the parties find their own solution—there is no evaluation at all . . . none whatsoever;
  • an arbitrator (on the other end) provides a thoroughgoing evaluation and also imposes a resolution upon the parties; and
  • every mediator-type person in between provides varying degrees of evaluation to help the parties reach a consensual resolution. 

But what all the mediation-like tools on the spectrum have in common is this: the mediator-type person does not have a dog in the hunt.


So how can this Subchapter V trustee thing be: namely, a mediator-like duty, with a dog in the hunt?

Here’s how: because Congress declares it to be so. 

  • And ours is not to reason why—ours is but to do and . . . to make it work.


So, Subchapter V trustees are faced with a tension—which creates a dilemma, namely:

  • How to satisfy the mediator-like facilitation duty; while
  • Simultaneously fulfilling various substantive duties—i.e., having a dog in the hunt.

Managing this tension and dilemma is a problem that every Subchapter V trustee must grapple with . . . in every Subchapter V case.

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