APPOINTMENT OR
ELECTION OF A CASE TRUSTEE (Page
89)
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).
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