Fiduciary Duty in Bankruptcy

Fiduciary duty in bankruptcy refers to the obligation of a trustee or debtor-in-possession to act in the best interests of the creditors and stakeholders involved in a bankruptcy case. This means they must manage the assets responsibly, disclose all relevant information, avoid conflicts of interest, and make decisions that benefit the creditors, rather than themselves. The fiduciary must prioritize the financial health of the bankruptcy estate, ensuring fair distribution of assets and upholding the rights of all parties affected by the financial distress. Violation of this duty can lead to legal consequences.