Skip to Main Content

In the News

Photo of U.S. Supreme Court building on a sunny day with water feature in front.

June 7, 2022

Justices' US Trustee Fee Ruling Could Wreak Ch. 11 Havoc

Law 360

In determining that a 2017 increase in U.S. trustee fees is unconstitutionally non-uniform, the U.S. Supreme Court provided no guidance on a potential remedy. That leaves the Fourth Circuit with options that would likely create chaos for debtors and the trustee system, bankruptcy experts say.

The government said the overpayments by U.S. trustee district debtors could be $324 million between 2018 and 2021 when Congress changed the law to make fees the same for all debtors nationwide

The U.S. trustee's office has suggested as a remedy that debtors in the administrator districts retroactively pay the higher fees they would have paid had the 2017 law been applied equally from the get-go. But this could generate even more problems than providing refunds to the trustee district debtors, Shane G. Ramsey, a vice chair of Nelson Mullins’ bankruptcy and financial restructuring group, told Law 360 in an article, Justices' US Trustee Fee Ruling Could Wreak Ch. 11 Havoc.  

"It would cause extreme chaos in all these bankruptcy cases," Ramsey said. "You're talking about going back and opening up cases, some that have been closed for years, and now charging these debtors money that has long since left the building."