In an intriguing twist, bankruptcy administrator districts in locales like North Carolina and Alabama are the judiciary’s beneficiaries. These districts, prior to the fee surge, had the liberty to charge similar fees as trustee districts. The plot thickened in October 2018, when these half-dozen districts embraced the escalated fees. Fast forward to 2021, and Congress revamped the statute, mandating uniform fee structures, irrespective of the debtor’s filing domain.
The Fee Structure & Constitutional Conundrum
Hinging on the disbursements a debtor makes to its creditors within a quarter, the trustee fees are determined. Once upon a time, a debtor’s fee ceiling was capped at $30,000 quarterly. However, the 2017 legislation rocketed that cap to a staggering $250,000 each quarter.
In a twist reminiscent of David versus Goliath, Alfred H. Siegel, the liquidating trustee from the erstwhile electronics giant Circuit City, took this fee uptick to the Supreme Court. He compellingly argued that such fee discrimination clashed with the Constitution’s demand for uniform bankruptcy laws. The justices, while agreeing, tossed the remedy ball into the lower courts’ court.
