Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC
Issues
Should the government compensate the bankruptcy debtors who paid higher fees than some other debtors by refunding the higher fees or by retrospectively charging the other debtors higher fees, or is prospective uniformity in fees sufficient?
This case asks the Supreme Court to decide the proper remedy for bankruptcy debtors who were treated differently, paying higher fees under a statute enacted by Congress without constitutional authority. John Q. Hammons Hotels & Resorts entities filed for Chapter 11 Bankruptcy in 2016 and paid $2.5 million higher fees than debtors in some federal districts, before the Judiciary and Congress resolved the disparate treatment. The U.S. Trustee argues that prospective equality in fees is a sufficient remedy, but if a retrospective remedy is required, the Court should extend the higher fees to debtors previously exempt from it. Hammons argues that the only proper remedy for fees paid under an unconstitutional statute is to refund them and that the remedies the U.S. Trustee proposes violate due process. The outcome of this case will affect how the bankruptcy system is funded—by debtors or taxpayers—and the remedial schemes for debtors who received unequal treatment.
Questions as Framed for the Court by the Parties
Whether the appropriate remedy for the constitutional uniformity violation found by this court in Siegel v. Fitzgerald is to require the United States Trustee to grant retrospective refunds of the increased fees paid by debtors in U.S. Trustee districts during the period of disuniformity, or is instead either to deem sufficient the prospective remedy adopted by Congress or to require the collection of additional fees from a much smaller number of debtors in Bankruptcy Administrator districts.
The United States is divided into ninety-four judicial districts. John Q. Hammons Fall 2006 LLC v. Office of the U.S. Trustee (“CA10”) at 7. Before 1978, the Judicial Conference funded bankruptcy courts and appointed bankruptcy judges (“BAs”) in all districts.
Additional Resources
- Daniel A. Lowenthal & Kimberly Black, An Update on the Ongoing Fight over the United States Trustee’s Fees, PBWT Bankruptcy Update (September 28, 2023).
- Keith Owens, The Post-Siegel Fallout Continues: The Supreme Court Has Accepted Certiorari to Determine Whether a Refund of Overpayments Made by Chapter 11 Debtors in Accordance with the Unconstitutional Fee Hike Under the United States Trustee Program is an Appropriate Remedy, JD Supra (October 3, 2023).