The Mandate and Authority of Examiners
22 Pages Posted: 8 Mar 2018 Last revised: 9 Aug 2018
Examiners in Chapter 11 are usually appointed to conduct investigations. Recent reform proposals, such as the ABI Reform Proposal and the SABRE-Report, have advocated a more flexible understanding of examiners. Further, some bankruptcy courts have given examiners powers other than investigation. This paper first addresses the question of whether such a use of examiners is permitted under the Bankruptcy Code. Second, a theoretical analysis will show that examiners with enhanced powers can offer huge advantages and can help to overcome problems caused by the debtor-in-possession model. In support, this article presents comparative legal insights from Germany, where, 20 years ago, Chapter 11 was copied into the German Bankruptcy Code. However, the German system provides mandatory supervisors with broad responsibilities in every self-administration procedure. These supervisors are most comparable to U.S. examiners possessing a broad mandate. The article illustrates the rationale behind this legislative decision. For U.S. bankruptcy law and practice, the German experience could be understood as an encouragement to use examiners in a more flexible way and to empower examiners whenever this seems useful. Finally, the ability to file derivative suits on behalf of the debtor serves as an example to illustrate the advantages of examiners having an extended mandate and the means by which the discussed approach could be practically implemented.
Note: This article is published in the Max Planck Private Law Research Paper Series with the permission of the rights owner, American Bankruptcy Institute Law Review.
Keywords: USA, U.S., Germany, Comparative Law, Bankruptcy, Chapter 11, Corporate Governance, Examiner/Examiners, Debtor in Possession, Fraudulent Conveyances, Preference Transfers, Liability, Derivative Suits
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