Debtors Eye Refund as They Look to Advance Bankruptcy Fee Feud

Friday, October 15, 2021

Robert Fishman discusses the ongoing dispute over a temporary increase in government fees required in Chapter 11 cases in Bloomberg Law. The debtors’ fees fund the Justice Department’s U.S. Trustee Program (USTP) which monitors the bankruptcy proceedings in 48 states and the U.S. territories; Alabama and North Carolina excluded. In 2018, Congress hiked USTP quarterly fees for debtors that filed for bankruptcy in the districts that participate in the program. With no corresponding fee hike in Alabama and North Carolina, there was a disparity in the first nine months of 2018, before the districts in the two states matched the fees. Debtors challenged that fee disparity as unconstitutional.

During those nine months in 2018, debtors in the jurisdictions under the USTP’s system paid more than eight times the amount paid as debtors in Alabama and North Carolina. With this, disputes could erupt over whether debtors or their creditors can reopen long-closed bankruptcy cases to get the money back.

According to Bob “It might be very hard this many years later to take advantage of a ruling that the fees were wrongly collected, but you’ll see a lot of lawyer creativity if it becomes possible to claw back those fees.”

To read the full article, click here.

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