[REDACTED] seeks review by
the Director of the Executive Office for United States Trustees of a decision
by the United States Trustee for Region [REDACTED] not to reappoint her
to the panel of chapter 7 trustees for the United States Bankruptcy Court
for the Eastern District of [REDACTED] when her appointment expired on
November 19, 1997.(1) Based upon the record
before me,(2) I conclude that the United
States Trustee has not yet reached a final decision whether [REDACTED]
should continue as a member of the chapter 7 panel. Accordingly, [REDACTED]
should remain on panel while that decision is being made. If the United
States Trustee ultimately determines that [REDACTED] should not remain
on the chapter 7 panel the United States Trustee should, at that time,
issue a notice to that effect which complies with the requirements of 28
C.F.R. 58.6. [REDACTED] will then have the opportunity to obtain review
of that decision under the provisions of 28 C.F.R. 58.6.
I. Factual Background
On August 15, 1997, the United
States Trustee notified [REDACTED] that she would be placed on panel inactive
status effective August 30. This did not remove [REDACTED] from the panel
of chapter 7 trustees. Rather, it suspended new case assignments to her
during the time she remained on inactive status.(3)
The August 15 notice explained that [REDACTED] had failed to rectify previously
disclosed deficiencies. The record reflects that the United States Trustee's
office had previously identified a number of problems to [REDACTED] in
a series of meetings and correspondences. [REDACTED] acknowledged the existence
of some of the problems but contested the validity of others.
Subsequent to August 15,
the United States Trustee worked with [REDACTED] in an effort to improve
her performance. The record reflects [REDACTED] took steps to attempt to
rectify those areas in which her performance was deemed deficient.
On November 12, 1997, the
United States Trustee issued an evaluation of [REDACTED]. The evaluation
concluded that [REDACTED] needed to improve her performance in a number
of specified areas. These included: (1) the timeliness, accuracy and completeness
of her trustee final reports; (2) the appropriateness and accuracy of her
objections to creditors' claims and her proposed distributions to creditors;
(3) her management of section 341 meetings of creditors; (4) her effectiveness
in securing and protecting estate property, her compliance with bankruptcy
laws and procedures, her timeliness in filing pleadings and in serving
those pleadings; (5) the timeliness, accuracy and completeness of her 180
day reports; (6) her effectiveness and efficiency in collecting and liquidating
estate assets and in collecting receivables, filing preference actions,
and in recovering the maximum amount possible for the benefit of creditors;
(7) the timely closure of her cases; (8) her preparation of bank reconciliations
for estate accounts and her follow-up on problem bank statements; (9) her
diligence in objecting to debtors' attempts to obtain discharge of their
debts when a discharge was not warranted; and, (10) responding to inquiries
from the public and parties in interest and to requests of the United States
The evaluation made clear,
however, that the United States Trustee had not reached a final conclusion
whether [REDACTED] would be able to rectify these problems or whether she
ultimately would be able to function as an effective member of the panel
of chapter 7 trustees for the Eastern District of [REDACTED]. Indeed, her
November 12 evaluation affirmatively stated that "a reappointment to the
panel will be issued when [[REDACTED]'s] performance indicates progress
in case administration and closure."
Eight days later, on November
20, 1997, the United States Trustee notified [REDACTED] that she was not
being reappointed to the panel of chapter 7 trustees. The record before
me reveals, however, that the United States Trustee had not, and still
has not, decided whether [REDACTED] should be a panel member. On December
3, 1997, the United States Trustee met with [REDACTED] to discuss how she
could improve her performance and begin receiving new cases. At that time,
[REDACTED] submitted a Work Plan to the United States Trustee, which described
the procedures she devised to improve her administration of bankruptcy
The United States Trustee reviewed that plan. On December 8, 1997, her Assistant United States Trustee wrote [REDACTED]. In that letter, the Assistant informed [REDACTED] that "additional time is needed to indicate the type of progress necessary to begin assigning cases to you again as an active panel member."
In conducting this review, the Director must consider two factors:
1. Did the United States Trustee's decision constitute an appropriate
exercise of discretion; and,
2. Was the United States Trustee's decision supported by the record.
See 28 C.F.R. 58.6(i) (specifying the scope of the Director's
Although the United States
Trustee issued a notice of non-renewal on November 20, 1997, the record
establishes that the United States Trustee has not yet decided whether
[REDACTED] should remain on the chapter 7 panel. Indeed, the Assistant
United States Trustee's December 8 letter expressly noted that the United
States Trustee would begin reassigning cases to [REDACTED] if the region's
ongoing review indicated that [REDACTED] had corrected her performance
Thus the record is clear
that the United States Trustee has not yet determined whether [REDACTED]
should be a member of the chapter 7 panel. Accordingly, [REDACTED] should
be returned to panel inactive status. Of course, the United States Trustee
is free to place her on active status at any time.
The United States Trustee
has acted prudently and wisely in her supervision of [REDACTED]. The United
States Trustee has provided [REDACTED] with specific information about
the problems [REDACTED] has experienced as a trustee. The regional staff
has spent considerable time meeting with [REDACTED] in an effort to help
her improve her performance. The region has given [REDACTED] substantial
time in which to improve her performance. It has reduced her caseload so
she can focus her attention upon rectifying areas that need improvement.
In turn, the record reveals that [REDACTED] is working to rectify the inadequacies
identified by the United States Trustee.
It is unclear, at this time,
whether those attempts will be successful. If the United States Trustee
ultimately determines that [REDACTED] should not be retained as a member
of the chapter 7 panel, then the United States Trustee must, at that time,
issue a notice of non-renewal that complies with 28 C.F.R. 58.6(a). That
notice must identify each reason for the decision. It should do so with
specificity -- as to each articulated basis. That notice must attach or
refer to all documents that support the United States Trustee's decision.
In the event the United States Trustee ultimately issues such a notice,
[REDACTED] may obtain administrative review of it if she complies with
the requirements of 28 C.F.R. 58.6, including the time deadline for seeking
review specified in subsection (b) and the requirements set forth in subsection
The foregoing conclusions and decisions constitute final agency action
in this matter.
January 12, 1998 Joseph Patchan
Executive Office for
United States Trustees
1. United States Trustees are Justice Department officials appointed by, and who serve at the pleasure of, the Attorney General. 28 U.S.C. 581(a) and (c). The Director of the Executive Office for United States Trustees is a Justice Department official who acts under authority delegated by the Attorney General. Panel trustees, such as [REDACTED], serve under appointments that generally have a term not to exceed one year.
2. The record in this matter includes the United States Trustee's notice of non-renewal; [REDACTED]'s request for review; the United States Trustee's response; and documents that accompany those submissions. It also includes material that Director sought and obtained from the parties.
3. [REDACTED] did not seek administrative review of that decision.
4. On August 30 [REDACTED] was placed on inactive status. Although she has chosen not to seek review of that supervisory action, it would be appropriate for the region to reach a final decision regarding her status on the panel as expeditiously as possible, consistent with the region's wise decision to afford [REDACTED] the opportunity to attempt to rectify her performance problems.