Opinion
No. 93-47076 J Chapter 11
July 23, 1999
MEMORANDUM RE CALCULATION OF POSTCONFIRMATION U.S. TRUSTEE FEES
The reorganized debtor and U.S. Trustee disagree as to the appropriate method for calculating the postconfirmation U.S. Trustee fees required by 28 U.S.C. § 1930(a)(6). The U.S. Trustee contends that the "disbursements" on which U.S. Trustee fees are to be calculated includes expenditures by the reorganized debtor in the ordinary course of its postconfirmation business operations. The reorganized debtor contends the term has a narrower meaning.
As originally enacted, 28 U.S.C. § 1930(a)(6) (West 1994) provided:
In addition to the filing fee paid to the clerk, a quarterly fee shall be paid to the United States trustee, for deposit in the Treasury, in each case under chapter 11 of title 11 for each quarter (including any fraction thereof) until a plan is confirmed or the case is converted or dismissed, whichever occurs first.
In 1996, Congress deleted the phrase "a plan is confirmed or", thereby extending the duty to pay quarterly fees to the period after confirmation.
This amendment left open the question whether the duty to pay postconfirmation U.S. Trustee fees applied to cases in which a plan had been confirmed prior to the effective date of the amendment. Congress subsequently clarified the statute by enacting § 109(d) of Public Law 104-208, 110 Stat. 3009, which provides, in relevant part:
. . . notwithstanding any other provision of law, the fees under 28 U.S.C. § 1930(a)(6) shall accrue and be payable from and after January 27, 1996, in all cases (including without limitation, any cases pending as of that date), regardless of the confirmation status of their plans. . . .
Although the fee is to be calculated on "disbursements", 28 U.S.C. § 1930(a)(6), the term "disbursements" is not defined.St. Angelo v. Victoria Farms, 38 F.3d 1525, 1534 (9th Cir. 1994), amended, 46 F.3d 969 (9th Cir. 1995). Courts have split into three camps as to how "disbursements" should be calculated in respect of the postconfirmation period.
One camp holds, in reliance on certain language in St. Angelo, that disbursements are to be calculated on disbursements from the estate. See, e.g., In re Celebrity Duplicating Services, Inc., 216 B.R. 942, 944-45 (C.D.Cal. 1997). Under this view, if the estate terminates upon confirmation pursuant to Bankruptcy Code § 1141(c), then the only fee owing is the minimum fee under 28 U.S.C. § 1930 (a)(6).
"[A] plain reading of the statute shows that Congress clearly intended `disbursements' to include all payments from the bankruptcy estate." St. Angelo, 38 F.3d at 1534. (Emphasis in original.) "The statute merely states that the trustee is entitled to fees based on the total amount of `disbursements' from the estate." Id.
A second camp holds that "disbursements" is to be given a broad construction such that the fee is calculated on all postconfirmation disbursements, whether or not from the estate. See, e.g., In re Maruko, Inc., 219 B.R. 567, 572-73 (S.D.Cal. 1998). In Maruko, the court noted that St. Angelo was decided before Congress amended 28 U.S.C. § 1930 (a)(6) to include postconfirmation disbursements. Maruko, 219 B.R. at 571. Thus, according to Maruko, the court's references in St. Angelo to payments from the estate are "inapposite" when the issue is the calculation of postconfirmation "disbursements". Id.
A third camp holds that "disbursements" means "disbursements" pursuant to the confirmed plan, but does not include payments to fund postconfirmation obligations. See, e.g., In re Munford, Inc., 216 B.R. 913, 918-19 (Bankr.N.D.Ga. 1997).
This court will adopt the third view. For the reasons stated inMaruko, St. Angelo, having been decided before Congress amended 28 U.S.C. § 1930(a)(6) to require postconfirmation fees, does not govern the construction of 28 U.S.C. § 1930(a)(6), as it applies to postconfirmation disbursements.
The cases in the second camp reason that "disbursements", as applied to the debtor's preconfirmation financial activity, is all-encompassing, that the statute, as amended, provides no indication that Congress intended to change the definition of "disbursements" as it applies to postconfirmation activity, and thus, that "disbursements", as applied to postconfirmation activity, must likewise be all-encompassing. See, e.g.,Maruko, 219 B.R. at 572.
It is true that "disbursements" as applied to preconfirmation activity is all-encompassing. It is also true, however, that preconfirmation disbursements are calculated on only those expenditures that are funded by property of the estate, and that are subject to the jurisdiction of the bankruptcy court. The second camp's view, however, would extend "disbursements" to disbursements that are not from the estate, and also to postconfirmation payments that are not even required by or enforceable under a confirmed plan, including payments that are not reportable to the bankruptcy court under a plan.
Bankruptcy Code § 1108 authorizes the debtor to operate in the ordinary course of its business unless the court "orders otherwise." Bankruptcy Code § 363(b)(1) requires notice and a hearing before the debtor may expend funds other than in the ordinary course of business. In either case, the expenditure is subject to bankruptcy court jurisdiction.
For example, under the second camp's view, a large entity that acquires the assets of a chapter 11 debtor, in consideration of the entity's agreement to fund a plan over a period of time after confirmation, would be liable for payment of U.S. Trustee fees calculated not just on its payments to fund the plan, but also, on all of its payroll, salaries, rent, and even on "disbursements" to fund the acquisition of an unrelated entity, until such time as the bankruptcy case closes.
The middle view, adopted here, regards the Congressional intent of funding the U.S. Trustee program from postconfirmation disbursements, yet, consistent with the application of the term for the preconfirmation period, limits "disbursements" to those that are subject to the jurisdiction of the bankruptcy court (see n. 3, supra), which would exclude payments to repay postconfirmation debts and operating expenses.