Attorneys who may have been looking forward to a sweetening of their compensation for service as Chapter 7 trustees have for the second year in a row had their hopes dashed by news that there is no funding available under the federal program set up for such additional payments.
The U.S. Department of Justice recently advised the Administrative Office of the U.S. Courts that there are no funds available to transfer to the judiciary for the purpose of making additional payments to eligible Chapter 7 bankruptcy trustees for fiscal year 2023.
“Trustees interested in receiving the additional payments for fiscal year 2024 should still file payment eligibility certifications,” the U.S. judiciary advised in its May 3 announcement that there would be no added payments to trustees for fiscal year 2023.
The Bankruptcy Administration Improvement Act of 2020 established an additional payment for eligible Chapter 7 trustees for fiscal years 2021 to 2026.
Among other objectives, the legislation aimed at ensuring “adequate funding” of U.S. trustees for “anticipated increases in business and consumer caseloads” by providing “long-overdue additional compensation for chapter 7 case trustees whose caseloads include chapter 11 reorganization cases that were converted to chapter 7 liquidation cases.”
The statute provides that eligible Chapter 7 trustees would receive an additional payment of $60 for each applicable case beginning in fiscal year 2021. The payments are funded by excess collections in the DOJ’s U.S. Trustee System Fund.
As explained by the U.S. judiciary, amounts available for payment to Chapter 7 trustees are determined annually based on the available balance in the Trustee System Fund, and by the case count of new Chapter 7 filings and cases converted to Chapter 7 during a fiscal year.
Like 2023, the DOJ reported insufficient funds in the Trustee System Fund for any additional payments in fiscal year 2022.