Videoconferencing § 341 Meetings: One Year Later

By Robert G. Drummond

In 2023, the U.S. Trustee Program (USTP) unveiled its initiative to virtually conduct § 341 meetings. However, due to the COVID-19 pandemic, which started in March 2020, many trustees had already been turning to Zoom’s videoconferencing platform to conduct their § 341 meetings prior to the USTP’s initiative. In fact, some chapter 13 trustees had been conducting videoconferenced § 341 meetings for decades.

At this juncture, the issuance of the USTP’s Zoom licenses to trustees is nearly complete. This article discusses the implementation of the USTP’s Zoom protocols for conducting § 341 meetings.

History of Videoconferencing

It has long been recognized that videoconferencing court appearances and § 341 meetings saves parties both time and money. This is especially true when debtors are inaccessible or located a long distance from the courthouse or site of the § 341 meeting. In recognition of the utility of videoconferencing § 341 meetings in chapter 13 cases, the USTP has authorized the purchase of videoconferencing equipment and hardware as an authorized budget item.1

The USTP amended the Handbook for Chapter 13 Standing Trustees in February 2014 to allow trustees to expend trust funds for the equipment and software necessary to regularly conduct meetings of creditors remotely,2 including equipment that allows point-to-point videoconferenced § 341 meetings when both the trustee and the far-end videoconferencing site have dedicated videoconferencing hardware. The debtor is required to appear at the far-end video site, be sworn in and produce the authorized forms of identification used for examination by the trustee.

The COVID-19 pandemic limited debtors’ ability to appear at far-end video locations. With the USTP’s support, many trustees migrated to the Zoom videoconferencing platform, which allowed debtors to appear from a remote location of their choosing. To enable this, private chapter 13 trustees purchased Zoom licenses to conduct § 341 meetings, other meetings and court appearances over the platform, with the USTP’s approval.

Emergence of the Zoom Platform

The USTP’s annual report for fiscal years 2022 and 2023 discussed the implementation of virtual § 341 meetings. It stated that after the COVID-19 pandemic, “private Trustees pivoted to primarily telephonic meetings....”3 The program announced a pilot of videoconferenced meetings and a launch of its virtual rollout of § 341 meetings by videoconference.

The pilot program contemplated that private trustees would conduct § 341 meetings using USTP-provided Zoom licenses. Trustees who were conducting § 341 meetings using their own licenses were required to switch to the USTP-issued license. As part of the launch, the USTP issued underlying documents, including a “best practices” document and “Interim Procedures for Trustees to Conduct Virtual 341(a) Meetings in Chapter 7, 12, and 13 Cases.”4 Lastly, the USTP issued an “Acknowledgement by Private Trustee Regarding the Terms of Use of Video Conference Licenses for the Purpose of Conducting Virtual Section 341(a) Meetings of Creditors.”5

Interim Procedures

This nine-page document established procedures for the conduct of the § 341 meeting by trustees. As indicated in the document,

upon the effective date, and until further notice, the 341 meetings of creditors for Chapter 7, 12, and 13 cases will be held by video-conference. The purpose of these interim procedures is to facilitate access to 341 meetings by all parties in interest while promoting efficiency by reducing travel costs and time commitments for participants and enhancing fact-finding over telephonic meetings.6

The interim procedures were designated as a “supplement to the handbook” for private trustees. The procedures should also be revised to allow trustees to use the USTP-provided Zoom license for work-related matters in addition to conducting § 341 meetings. This might include court appearances and meetings related to the conduct of trustee and bankruptcy organization-related business.

Technology

Under the Interim Procedures, the USTP would provide a Zoom license for trustees to use “on their computer,” but its application was limited. The procedures required that the trustee conduct the § 341 meeting from “the Trustee’s primary business location” or other USTP-approved location in the district. The trustee “may not” conduct the § 341 meeting from outside of the district without prior USTP approval, and must ensure that “appropriate decorum is maintained.” The procedures limited the use of the Zoom license to conduct virtual § 341 meetings, as it would be used for § 341 meetings and “no other purpose.”

The USTP established Zoom settings and features, including a virtual background that a trustee “must use” when conducting § 341 meetings. The virtual background is a light background with the USTP badge and U.S. flag in the background. The interim procedures acknowledged that the private trustees had already established secure portals for the conveyance of § 341 meeting documents. The interim procedures did not, however, contemplate the use of dedicated videoconferencing hardware that had previously been approved under the 2014 handbook additions. The required hardware under the interim procedures is limited to computer-based hardware.

Trustee Acknowledgment

Each private trustee is responsible for millions of dollars of receipts and disbursements each year. In view of this, it is incredible that the trustees were required to sign an “Acknowledgment by Private Trustee Regarding the Terms of Use of Video Conference Licenses for the Purpose of Conducting Virtual Section 341(a) Meetings of Creditors” to safeguard against trustee misuse of the USTP-provided Zoom licenses. The acknowledgment imposed onerous conditions on the trustees, who were being required to use the USTP license. The USTP would not issue the Zoom license to the trustee until it received their signed acknowledgment.

The USTP reserved the right to modify, suspend or revoke the agreement at its discretion “based on the private Trustee’s noncompliance with this acknowledgment or such other related terms and conditions as the USTP requires.” Noncompliance with the acknowledgment would result in immediate suspension of the Zoom license, “which may result in the inability to conduct the meetings of creditors and affect the ability to continue to serve as a Trustee.” Other noncompliance measures could include disciplinary action, including suspension, termination or removal.

Interestingly, the trustee was required to certify that they would comply with all system requirements, including a “computer with a built-in camera, speakers, and a microphone, or a webcam to perform these functions,” and a “dual-core two gigahertz or higher processer with four gigabytes of RAM.” Standalone videoconferencing devices are not authorized under the USTP’s requirements — even though the 2014 additions to the Handbook for Chapter 13 Trustees authorized their purchase as a budget item.

The handbooks for chapter 7 and 13 trustees require that all § 341 meetings be electronically recorded “using equipment provided by, or purchased with the approval of the” U.S. Trustee.7 Unlike the new Zoom protocol, the USTP provided Marantz recorders for use by trustees without requiring trustees to enter into onerous and punitive agreements restricting their use.

In its fiscal year 2025 Congressional Budget submission (dated March 2024), the USTP applauded its own efforts in implementing virtual § 341 meetings. It explained that the permanent switch to the virtual format, “which was based on the USTP’s experience through the COVID-19 pandemic in conducting meetings primarily by telephone,” resulted in greater participation. The USTP stated, “The change was made following internal and external consultation with stakeholders to assess the effectiveness of virtual meetings.”8 If there has been any ongoing consultation after the initial rollout, it has not included all stakeholders.

Trustees’ Use of Zoom Going Forward

The use of the Zoom platform has made attendance at § 341 meetings easier and more cost-effective. However, going forward, the USTP should consider the following suggestions.

Avoid Duplication

Prior to the issuance of their USTP Zoom license, many trustees had been conducting § 341 meetings using their own Zoom licenses. In addition, chapter 13 trustees used their own Zoom licenses for other meetings, mediations and court hearings. The Chapter 13 Trustee Handbook requires either the use of a USTP-provided recorder, or the use of one purchased by the trustee “with the approval” of the U.S. Trustee. This would be a good pattern to follow for Zoom licenses. The USTP could avoid duplication and expense to the Department of Justice by allowing chapter 13 trustees to use one license, purchased at the trustee’s expense, for all videoconferencing needs. Issuing a Zoom license at the USTP’s expense that can be used only for § 341 meetings results in unnecessary cost and duplication.

The interim procedures should be revised to allow trustees to use the USTP-provided Zoom license for work-related matters in addition to conducting § 341 meetings. This might include court appearances and meetings related to the conduct of trustee, and bankruptcy organization business.

Allow the Use of Sophisticated, Dedicated Videoconferencing Hardware

This videoconferencing hardware may include Polycom, Logitech and Neat Bar. These dedicated standalone videoconferencing units offer a superior presence in videoconferenced meetings. Their purchase is already authorized under the terms of the Chapter 13 Trustee’s Handbook. Limiting § 341 meetings to primitive laptop and desktop hardware also limits the professional presentation of the meetings. Limiting use of the cameras integrated with desktop or laptop computers might lead to presentation problems, such as substandard camera angle and lack of clarity of video transmission.

Eliminate the USTP’s Virtual Background

The professionalism of the trustee’s appearance at the § 341 meeting is of paramount importance. The use of the USTP virtual background sometimes leaves shadows over the speaker’s shoulders and around the speaker’s head, which are enhanced because of the light-colored background. Virtual backgrounds generally make the speaker disappear or reappear as they move around and talk. The use of the virtual background requires the speaker to refine distance and lighting issues. Eliminating the required USTP virtual background would dispense with many of these problematic issues and allow the trustee to display the sign provided by the USTP that informs people that the Department of Justice investigates bankruptcy crimes.

The Interim Procedures Should Be Revised to Allow § 341 Meetings from Elsewhere

The interim procedures should be revised to allow trustees to conduct § 341 meetings from venues other than their primary office, as travel takes trustees out of the office. Such technology as virtual private networks and Zoom allow for the virtual conduct of § 341 meetings from anywhere without the far-end user even knowing that the trustee is not in the office.

Conclusion

Videoconferenced § 341 meetings are both time- and cost-efficient, and the Zoom platform has made the § 341 meetings easily accessible to all stakeholders. However, improvements can be made to make the system less costly to the USTP while maintaining a professional and efficient meeting protocol.

Editor’s Note: The views expressed in this article are solely those of the author and not ABI.

Bob Drummond has been the standing chapter 13 trustee for the District of Montana since 1991. He was president of the National Association of Chapter 13 Trustees from 2012-13. He is currently on the editorial advisory board of the American Bankruptcy Law Journal, and is the publisher of the Montana Bankruptcy Reporter.