By legal definition, a joint administration refers to a court approving a petition or appeal wherein two or more cases are given the chance to be administered together as long as there is no conflict of interest between the two cases.
Understanding what is joint administration better
In the case of filing for bankruptcy, a joint administration allows closely related debtors to combine their bankruptcy cases as a way to save costs and make it more convenient. How a joint administration works can be further understood by knowing how joint petitions work in bankruptcy.
A joint petition is a type of bankruptcy petition often filed by married couples who both have large debts to pay. Significantly, the Bankruptcy Code states under Section 302 that only married couples can file for a joint case. A partnership, which can be considered as closely related debtors, can also file for a bankruptcy but is treated differently under the Code. More than that, joint petitions can only be voluntarily filed.
The thing is that, there are specific rulings as to who can file for a joint bankruptcy case. For example, marriage as defined by federal law of the United States should be between a man and a woman – which excludes couples who are married but are of the same-sex.
The difference of joint administration from joint petition
Unlike joint petitions which are only meant for married couples, a joint administration of debts filed can be done between two or more related debtors. This closely related debtors can be between a husband and wide, a single partnership or more, or an affiliate and debtor. Also it is the bankruptcy court that orders for a joint administration of filed bankruptcy cases whereas a joint petition is voluntarily filed by married couples.
The advantages of filing for a joint case
In bankruptcy, filing for a joint case provides plenty of monetary advantages since only one filing fee needs to be paid and the combined cases can be easily managed by a single trustee. The time of filing it takes is also shorter than it would two separate cases and the ruling of the cases can be easily determined once the necessary proceedings are accomplished.
On the other hand, joint administrations keep each estate of the concerned debtors still separate so each filing party should pass their respective claims for their assets and liabilities. This only means that a creditor of one specific party will not be able to receive any distribution of assets coming from the other member of joint case and vice versa.
But since the estates of each party are under the administration and supervision of just one bankruptcy trustee, then the administrative expenses that both parties have to pay are cut in half. A joint administration also helps you save on paying fees for bankruptcy attorneys and Court since a single notice can simply be issued covering two or more cases with closely related debtors. In its simplest terms, a joint administration of two or more bankruptcy cases is the best way to save on administrative costs and have the estates of separate parties involved be handled better and more efficiently.