A bankruptcy trustee who is removed cannot retroactively receive administrative expenses, the Fourth Circuit has ruled, blocking former bankruptcy trustee Donald King from filing an application for professional fees after being relieved of his duties.
Split Decision on Trustee Fees
In a split opinion Friday, a three-judge panel on the Fourth Circuit reversed a district court decision that allowed former bankruptcy trustee Donald King to apply for legal fees for his counsel after his duties were terminated when the case was converted to a Chapter 13. The majority, composed of U.S. Circuit Judges A. Marvin Quattlebaum and Julius N. Richardson, determined that only a current trustee can submit fee applications.
Conversely, U.S. Circuit Judge J. Harvie Wilkinson dissented, labeling the majority’s decision a “rigid reading” that “firmly closes off the path to fair compensation for attorney work already performed simply because the trustee who oversaw that work is no longer the active trustee.”
Donald King bankruptcy Fees : Origins of the Dispute
The case originates from a Chapter 7 liquidation filing by Byron David in 2018, with King appointed as the Chapter 7 trustee. King sought court approval to retain Odin Feldman & Pittleman PC, which was granted. In 2019, David applied to convert his case to Chapter 11, and King was reappointed as Chapter 11 trustee but did not seek permission to retain the same firm for the Chapter 11 representation.
