4-3.1 GENERALLY

The primary responsibilities of the United States Trustee in chapters 12 and 13 cases are the appointment of one or more individuals to serve as standing trustees; the supervision of such individuals in the performance of their duties; and the supervision of the administration of cases under chapters 12 and 13.

Trustee supervision requires the monitoring of a standing trustee's budget, annual report, monthly reports, and such other reports as may be required by the United States Trustee. It entails monitoring a standing trustee's performance of statutory duties, including compliance with the policies and initiatives of the United States Trustee Program, and adherence to fiduciary standards. This information is used to evaluate a standing trustee's competence, commitment to administering cases properly, compliance with applicable laws, and integrity in the discharge of a standing trustee's duties.

4-3.2 STANDING TRUSTEE COORDINATORS

To focus responsibility and ensure the proper quality of supervision, the United States Trustee shall designate one employee in the region to coordinate all standing trustee matters. A standing trustee coordinator is expected to have the knowledge and ability to assess and expeditiously resolve most standing trustee issues. It is standard practice that the coordinator be a bankruptcy analyst. The designation as standing trustee coordinator is not intended to alter any reporting structure, nor does it preclude efforts by other employees in the standing trustee area. The United States Trustee and the coordinator will serve as the primary points of contact for the Office of Review and Oversight with regard to standing trustee matters. In addition, the United States Trustee may designate an attorney or attorneys to work with the standing trustee coordinator to conduct substantive reviews of the standing trustees. An element delineating these responsibilities is to be included in a standing trustee coordinator's performance work plan.

4-3.3 EVALUATION OF STANDING TRUSTEES

The United States Trustee shall prepare a formal annual written evaluation of each standing trustee's performance in the format set forth at Appendix 4-1. The annual evaluation must be completed by September 1 for a chapter 13 standing trustee and by December 1 for a chapter 12 standing trustee, so that it may be reviewed in coordination with a standing trustee's proposed budget, compensation level, and percentage fee.

Upon completion of the evaluation, the United States Trustee shall confer with the standing trustee to discuss the evaluation. At the meeting, the United States Trustee shall identify any deficiencies and discuss the proposed resolution of any deficiencies. The standing trustee shall be afforded an opportunity to raise matters with the United States Trustee. A summary of the conference and the United States Trustee's determination of the standing trustee's performance as a fiduciary, in the administration of cases, and of the responsibilities of the office shall be reflected in the evaluation.

The evaluation shall be reviewed in conjunction with the standing trustee's budget and recommendation for percentage fee and compensation that are submitted to the Director. No percentage fee or compensation order may be issued prior to the completion of the evaluation. The evaluation shall reflect the efforts of the United States Trustee to meet regularly to discuss, analyze, and document the standing trustee's performance. Based upon the evaluation, as well as other documents and observations, the United States Trustee shall determine whether remedial or enforcement actions are required.

The United States Trustee is to provide a copy of the completed evaluation to the standing trustee. The evaluation, at a minimum, shall consist of the following criteria:

1. Timeliness and Quality of Monthly Reports Filed by the Chapter 12 or 13 Standing Trustee. A standing trustee is required to file a monthly report in the format set forth in the Handbook for chapter 12 or chapter 13 standing trustees. A standing trustee is to submit the monthly report within 30 days following the prior month. The monthly report, along with copies of reconciled bank statements submitted by a standing trustee, are to be reviewed within 30 days of receipt by the United States Trustee. The report allows the United States Trustee to determine that payments are being made by debtors and that the standing trustee is disbursing monies to creditors. The United States Trustee shall monitor the expense fund to determine if funds in excess of the allowed operating reserve have been expended or if there is a decrease in receipts. Fluctuation in receipts may require an adjustment to a standing trustee's percentage fee and level of compensation.

   The report should also be reviewed to determine the sufficiency of the standing trustee's bonding, whether estate funds are adequately collateralized, and whether the approved budget has been adhered to. Notations shall be made if the reports are inaccurate, incomplete, consistently late, or not filed.

2. Bank Account Information. Bank account information is to be reviewed monthly by the United States Trustee to verify that estate funds are held in proper accounts pursuant to the Handbook for chapter 12 or chapter 13 standing trustees; that the financial information contained in the monthly report is accurate; that bond coverage is adequate; that bank collateralization is sufficient; that estate funds have been timely deposited; that the standing trustee is making disbursements on a timely basis; and that no unauthorized fund transfers have occurred.

   There are several methods of review of bank account information: monthly review of bank statements, monthly review of account summaries of estate funds from the standing trustee's bank(s), submission of bank statements with reports, and periodic on-site reviews. To the degree there are departures from standards, the standing trustee is to be notified and the matter documented. Deficiencies are to be noted in the evaluation and/or discussed during the evaluation, as appropriate. A standing trustee must authorize his/her bank(s) to release all estate account information to the United States Trustee.

3. Section 341 Meetings of Creditors. A standing trustee shall personally conduct the meeting of creditors pursuant to 11 U.S.C. § 341, unless another qualified individual is approved in writing by the United States Trustee. Pursuant to 11 U.S.C. §§ 341 and 343, attendance and oral examination by the trustee, creditors, or the United States Trustee of all debtors, including both spouses in a joint case, at the section 341 meeting is mandatory, unless excused by court order. At least annually, the United States Trustee shall review the cases assigned to a particular standing trustee's docket or calendar by attending a meeting of creditors (and/or by reviewing audio tapes of the meeting) and evaluating whether appropriate questions were asked; that irregularities and deficiencies in the petitions, plans, or budgets were identified; and that deadlines were imposed upon debtors for the submission of additional information. The United States Trustee should verify that a standing trustee tapes all section 341 meetings, that the tapes are audible, and that the tapes are retained for two years. A standing trustee's conduct of section 341 meetings is an element in the trustee's annual evaluation. The United States Trustee shall provide a written report of the review for the trustee's file.

4. Substantive Case Administration. The United States Trustee shall determine whether a standing trustee files pleadings consistent with professional standards in the following areas: motions to dismiss; objections to confirmation; review of and, if appropriate, objections to claims; and objections to attorney fees. The United States Trustee shall also review a standing trustee's systems to assure that they adequately address issues such as serial filers, unauthorized filings, and compliance with the requirements in the Bankruptcy Code and Bankruptcy Rules applicable to chapter 13 debtors engaged in business. The level of knowledge and compliance with the law and United States Trustee policies is to be documented in a trustee's file. When appropriate, deficiencies should be discussed with the standing trustee and noted in the evaluation or other document conveyed to the standing trustee. Issues to be examined include: plan feasibility, claims review, plan modification, and misdisbursements. The Office of Review and Oversight maintains a Management Review Guide that can be used as a tool to assess a standing trustee's case administration.

5. Court Performance. At least annually, the United States Trustee shall observe a standing trustee's court appearances. A summary of performance is to be documented in the trustee's file.

6. Public Complaints. The United States Trustee should request that any complaint concerning a standing trustee be made in writing. If appropriate, the written complaint is to be sent to the standing trustee and the trustee shall send a written response to the United States Trustee by a date set by the United States Trustee. Each complaint is to be investigated independently and not evaluated solely on the standing trustee's response. Immediate and appropriate remedial action is to be taken on all valid complaints.

   All complaints and full reports of investigations are to be maintained in the trustee's file. The United States Trustee should respond in writing to each complainant within 30 days of receipt of the complaint. A lawsuit against a trustee, or a pleading requesting that a standing trustee close a case, distribute funds under a confirmed plan, or which seeks the removal of the standing trustee, is to be investigated to determine whether it should be considered to be a public complaint to be investigated by the United States Trustee.

7. Lawsuits or Claims Filed Against a Standing Trustee. Any lawsuit or claim against a standing trustee, including litigation not related to the standing trustee's duties and performance, shall be investigated, consistent with the procedures applicable to investigating public complaints (see preceding paragraph).

8. Declination of Cases/Conflicts. A standing trustee must be knowledgeable of 11 U.S.C. § 101(14), which defines "disinterested person," and 11 U.S.C. § 101(31), which defines "insider," and must decline any appointment in which he/she has a conflict of interest, where there is a lack of disinterestedness, or where the trustee is an insider. Conflicts of interest include, without limitation, the representation by a standing trustee's firm of a debtor during the administration of the chapter 12 or 13 case. Further, a conflict exists if a standing trustee's representation of a client requires the standing trustee to take a position contrary to the fiduciary responsibilities of a standing trustee or the trustee's firm. If a trustee discovers a conflict of interest or a lack of disinterestedness after accepting an appointment, the trustee should immediately file a notice of resignation in the case and notify the United States Trustee, who must reassign the case to another trustee. Conflicts may not be waived by either the debtor or a creditor.

   If a conflict exists, or if the trustee is not disinterested or is an insider, the standing trustee shall resign from the particular case. The number of and reason for resignations for conflict shall be documented. To the degree that a trustee has a large number of resignations for conflicts, the United States Trustee, with the approval of the Director, may institute an enforcement action against the standing trustee.
   
   If a standing trustee is engaged in another occupation or business, or is affiliated with an entity that conducts a business or practice that provides services to debtors or creditors, the standing trustee must advise the United States Trustee of those interests so that the United States Trustee may determine whether the standing trustee's other occupation or business conflicts with the fundamental duties of a standing trustee.

   A standing trustee may not act as an agent for insurance companies on any sale of insurance to chapter 12 or 13 debtors, nor make any claim for commissions on any premiums paid to an insurance company by chapter 12 or 13 debtors. This restriction extends to any relative as defined in 28 C.F.R. § 58.4.

   A standing trustee should demonstrate compliance with the Handbook for chapter 12 or chapter 13 standing trustees concerning conflicts and/or outside business interests.

   A standing trustee may not advertise in newspapers or other public information media or take any other action that could reasonably be interpreted as encouraging debtors to file petitions under chapter 12 or 13 of the Bankruptcy Code. Subject to the approval and guidance of the United States Trustee, a standing trustee may disseminate information to interested persons about chapter 12 or 13 and may participate in meetings, educational seminars, or institutes concerning chapter 12 or 13.

9. Review of Budget and Annual Report.

   1. Review of Budget. A standing trustee must maintain an accounting system that will provide, at a minimum, the budget data required to fix his/her percentage fee and annual compensation. An annual budget must be submitted to the United States Trustee by July 1 of each year in the case of a chapter 13 standing trustee, and by October 1 of each year in the case of a chapter 12 standing trustee. Separate reports are required to cover a standing trustee's administrative expenses, personnel expenses, allocated expenses (including the basis for the allocations), and workload exhibit. (See Appendix 4-2.)

      The standing trustee coordinator must conduct a detailed review of the budget. After the United States Trustee determines that the budget contains only actual and necessary expenses, the budget should be forwarded to the Office of Review and Oversight, with the United States Trustee's recommendation as to the appropriate annual compensation and percentage fee. The United States Trustee's recommendation must be submitted by August 15 of each year in the case of a chapter 13 standing trustee, and by November 15 of each year in the case of a chapter 12 standing trustee. No percentage fee or annual compensation will be authorized in the absence of sufficient supporting data.

      During the budget review each year, the United States Trustee should note in the trustee's file the number and types of revisions that were made to the trustee's budget submissions. Any savings obtained by reason of the region's review also should be documented.

   2. Review of Annual Report. A standing trustee must submit an annual report in the format prescribed by the Executive Office for United States Trustees for the period covering January 1 to December 31 for a chapter 12 standing trustee, and for the period covering October 1 to September 30 for a chapter 13 standing trustee. If a standing trustee did not serve a full cycle, an annual report must still be submitted for the period of service. Annual reports are to be submitted to the United States Trustee by February 15 in the case of a chapter 12 standing trustee, and by November 15 in the case of a chapter 13 standing trustee. If a standing trustee does not serve through the end of a reporting year, then the annual report must be filed within 45 days of the date the standing trustee's service ends.

      The report must indicate the gross amount received by the standing trustee, the amounts disbursed under plans, the amounts disbursed to the standing trustee for compensation and expenses, the amount of interest earned, the amounts returned to debtors, and, if appropriate, the amounts to be remitted to the United States Trustee for payment to the United States Trustee System Fund.

      The timely submission of an accurate report is imperative because it serves as the basis for a standing trustee's audit. The United States Trustee is responsible for reviewing the annual report and for documenting any deficiencies in timeliness or accuracy.

      A standing trustee's failure to submit a timely or accurate report may result in remedial action. If the annual report indicates expenditures that are not actual and necessary for fulfilling the standing trustee's duties, the standing trustee shall be instructed to reimburse the expense account. Continued violations shall be considered a breach of the standing trustee's fiduciary duty.

10. Final Reports. At the time of evaluation, the United States Trustee shall determine whether a standing trustee has filed timely final reports on cases administered.

11. Audit/Accelerated Limited Scope (ALS) Audit/Office Visit. Deficiencies noted in an audit, ALS, or office visit and the degree of responsiveness by a standing trustee shall be documented, with an emphasis on recurring deficiencies.

12. Misdisbursements. The United States Trustee shall evaluate the number and level of misdisbursements made by a standing trustee during the year and previous years.

13. Maintenance of Statistics. The Director shall keep statistics on all chapters 12 and 13 costs and expenses from standing trustees' budgets and annual reports, including statistics on the amounts of proposed expenditures the United States Trustee has denied or reduced. These statistics shall be provided to the United States Trustee to assist in monitoring the costs and expenses of the standing trustees.

4-3.4 UPDATED SF-86

At the time a standing trustee submits the proposed budget for the upcoming year, the standing trustee shall update the information set forth in the Questionnaire for Sensitive Positions, SF-86, or similar form. Any supplemental information shall be evaluated. The proposed budget shall contain the following statement:

The information contained in the Questionnaire for Sensitive Positions, SF-86, submitted in connection with my appointment, remains accurate. Any supplemental or updated information is attached