In this article, we’ll discuss how challenging it is to change a Bankruptcy Trustee, and the process for doing so.

It’s important to note that this is an action initiated by creditors of the bankrupt estate, and it is quite common for an existing bankruptcy trustee to ensure that any new trustee is a genuine creditor.

There are two primary ways to replace a Bankruptcy Trustee.

The first is a streamlined process, outlined in Section 181 of the Bankruptcy Act. Here, the creditor reaches out to the existing Bankruptcy Trustee, requesting the change. Should the Trustee agree, they’ll issue a notice to all creditors, stating the proposed change. If no objections are received within two weeks, the change becomes effective.

The alternative method is by a meeting of creditors, which is necessary if the Bankruptcy Trustee does not agree to the change. If creditors can show they have sufficient numbers and meet the criteria, they can call a meeting of creditors to vote on the change. Coming back to the initial part of the question, how hard is it? It varies from bankrupt estate to bankrupt estate. Sometimes the process is quite straightforward. Other times it can be highly contentious. And in the extreme, it can even involve a court dispute, for example, on the adjudication of creditors’ claims, and hence if the voting thresholds were met or not met.