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Sept. 15, 2023

Will the Supreme Court Grant Cert to Address the Issue of the Appropriate Post-Siegel Remedy? Unlikely.

By Shane G. Ramsey

In earlier posts, the Red Zone has discussed the Supreme Court’s ruling in Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022), which held that increased U.S. Trustee quarterly fees for large Chapter 11 debtors between 2018 and 2020 under the Bankruptcy Judgeship Act of 2017 (the “2017 Act”) were unconstitutional because of disparate treatment of Chapter 11 debtors in Bankruptcy Administrator (“BA”) districts. Siegel, however, left open the issue of the appropriate remedy for the constitutional violation and remanded the decision back to the Fourth Circuit for consideration of the issue. Simultaneously, the remedy issue was being addressed in subsequent judicial decisions. The Second Circuit, Ninth Circuit, Tenth Circuit, and Eleventh Circuit Courts of Appeals, along with the Eastern District of Virginia Bankruptcy Court, have all held that the government must refund fees that were overpaid based on the holding in Siegel. 

In response to these decisions, the government has filed petitions for certiorari in the following cases:

  • Tenth Circuit Decision: The U.S. Solicitor General filed a petition for certiorari on June 23, 2023 in Office of the U.S. Trustee v. John Q. Hammons Fall 2006 LLC, 22-1238 (Sup. Ct.). The petition has been fully briefed and has been distributed for conference on Sept. 26, 2023.
  • Second Circuit Decision: The U.S. Solicitor General filed a petition for certiorari on July 14, 2023 in William K. Harrington, United States Trustee, Region 2, Petitioner v. Clinton Nurseries, Inc., et al., 23-47 (Sup. Ct.). A response to the cert petition is due on Sept. 15, 2023.

Given that there is currently no circuit split on this issue, it appears increasingly unlikely that the Supreme Court will grant cert in either of these two cases.

Nelson Mullins attorneys are experienced in handling bankruptcy matters of all sizes and are well equipped to advise debtors, trustees, purchasers, professionals, and other stakeholders on both the legal and practical aspects of any number of issues that arise in a bankruptcy case, including payment of U.S. Trustee fees.