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Bankruptcy Constitutional Law Litigation

Bankruptcy Court Rules U.S. Trustee Amended Fee Schedule Unconstitutional

The Office of U.S. Trustee is known among practitioners as the “watchdog” of the bankruptcy process. To fund the U.S. Trustee, Chapter 11 debtors must pay quarterly fees. Following a recent substantial increase to the U.S. Trustee fee schedule, the U.S. Bankruptcy Court for the Eastern District of Virginia found the amended fee schedule to be unconstitutional because it was being applied nonuniformly to Chapter 11 debtors around the country.

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The Office of U.S. Trustee, a division within the Department of Justice, is known among practitioners as the “watchdog” of the bankruptcy process. To fund the U.S. Trustee, Chapter 11 debtors must pay quarterly fees, with the amount due calculated based upon the debtor’s disbursements during the preceding quarter. Following a recent substantial increase to the U.S. Trustee fee schedule, the U.S. Bankruptcy Court for the Eastern District of Virginia in In re Circuit City Stores, 2019 Bankr. LEXIS 2121 (Bankr. E.D. Va. July 15, 2019), found the amended fee schedule to be unconstitutional because it was being applied nonuniformly to Chapter 11 debtors around the country.

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