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Courts Require Repayment of Trustee Program Bankruptcy Fees Deemed Unconstitutional by Supreme Court

In Siegel v. Fitzgerald, 142 S. Ct. 1770 (June 6, 2022) (Siegel), the United States Supreme Court held that Congress' 2018 increase in fees that must be paid by debtors in bankruptcy to the United States Trustee Program (Trustee Program) was unconstitutional because the fee increase did not also apply to the districts in the two states that do not utilize the Trustee Program. However, the Supreme Court left open the question of the remedy for debtors that paid the unconstitutional fees.
Since then, the United States Trustee (U.S. Trustee) has consistently fought to avoid issuing refunds forcing courts to grapple with whether Siegel's holding should apply retrospectively to fees already paid or prospectively to fees being paid going forward. Courts, including three circuit courts of appeal, have held, over the U.S. Trustee's objection, that debtors are entitled to retrospective relief in the form of refunds.
In this Reuters article authored by Loeb & Loeb Restructuring & Bankruptcy partners Schuyler Carroll and Bethany Simmons and associate Noah Weingarten, the writers discuss fees paid by debtors in bankruptcy to the U.S. Trustee and court decisions regarding repayments following the U.S. Supreme Court's decision in Siegel v. Fitzgerald that a fee increase was unconstitutional.
To read the full article, please visit Reuters' website (subscription required).