Supreme Court to determine constitutionality of increase in bankruptcy fees – Business Daily News

Georges mesires

The Supreme Court said on Monday it would consider a case regarding the constitutionality of Chapter 11 bankruptcy fees.

The case, which stems from a 2017 law that increased government fees that most large bankrupt companies must pay, has met with mixed rulings from appellate courts. Last week, the US trustee, the Department of Justice’s bankruptcy watchdog, asked the court to fix the issue.

“What this case highlights for me is that regardless of the court ruling, bankruptcy cases for senior housing operators are costly,” said George Mesires, co-head of the team. Senior Living & Care by Faegre Drinker. McKnight’s daily business. “Quarterly trustee payments are just the tip of the iceberg, so that these fees be capped at $ 30,000 as they were before the Bankruptcy Judgeship Act of 2017, or $ 250,000 as it is now. formulated, the burden of administrative expenditure is heavy. “

The statutory imposition of higher fees in most, but not all, U.S. bankruptcy courts has raised uncertainty about the legal status of approximately $ 324 million in fees imposed under the 2017 law, a. writes the US administrator in court records.

The underlying lawsuit was brought by Alfred Siegel, the administrator who oversaw Circuit City’s liquidation process. “He argued that the 2017 law violated the bankruptcy clause of the U.S. Constitution, which requires uniform bankruptcy laws because it increased fees for Chapter 11 debtors in most states, but failed does the same for Alabama and North Carolina ”, Reuters reported.

North Carolina and Alabama elected in 1986 to use a different government entity, known as the bankruptcy administrator program, to perform similar functions as the US trustee in large corporate bankruptcies.

The US Trustee and Siegel want the Supreme Court to make a final decision after the 4th and 5th Circuit courts of appeal upheld the law, while the 2nd and 10th Circuit courts of appeal ruled it unconstitutional.

“As an industry, operating expenses for senior housing are high, so these quarterly charges, which are cash-out-based, will also be high,” Mesires said. “It’s not hard to see why bankruptcy should be an option of last resort for senior housing operators when there are effective out-of-court tools available to sometimes achieve the same goal. “

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