NCBRC Files Amicus on Pre-Confirmation Trustee Fees when Plan Not Confirmed

Posted by NCBRC - April 6, 2022

NCBRC has filed an amicus brief on behalf of the NACBA membership in the Tenth Circuit case of Goodman v. Doll (In re Doll). The case addresses the issue of whether a chapter 13 standing trustee is entitled to keep pre-confirmation statutory fees when the case is ultimately dismissed prior to plan confirmation. Case No. 22-1004 (filed April 6, 2022). The bankruptcy court found in favor of the trustee and the district court reversed.

The brief argues that the plain language of section 1326(a)(2) requires that payments made by a debtor under section 1326(a)(1)—payments proposed by the plan—are to be returned to the debtor if the plan is not confirmed. Section 1326(b) applies only to cases in which plans are confirmed, because it uses the term “payment to creditors under the plan.” As the court held in Kinney v. HSBC Bank USA, N.A. (In re Kinney), 5 F.4th 1136, 1142-43 (10th Cir. 2021), payments “under the plan” are payments under the authority of a plan. Until a plan is confirmed, it does not provide authority for anything. For the same reason, section 586(e)(2) of title 28, which refers to “payments. . . under plans” does not apply when a chapter 13 plan is not confirmed. The purpose of that provision is solely to set the amount of the fee that is required to be paid by other provisions. The fact that Congress specifically added language authorizing payment of fees to trustees in cases under chapter 12 and subchapter V of chapter 11 in which a plan is not confirmed bolsters the conclusion that it intended different treatment of chapter 13 cases.

The legislative history of the relevant provisions supports this plain language result. When chapter 13 was first enacted, the Code did not require payments to the trustee prior to confirmation of the plan. Therefore, language originally in section 1302(e) and later moved to section 586(e)(2) of title 28 referred to the trustee taking fees from payments under a confirmed plan. When preconfirmation payments to the trustee became required, Congress enacted section 1326(a)(2) to govern their disposition when a plan is not confirmed, and directed that they be returned to the debtor. When Congress enacted chapter 12 and subchapter V of chapter 11, it specifically prescribed different treatment for trustee fees in those cases. Congress has amended the relevant provisions numerous times and has never chosen to treat chapter 13 trustees the same as trustees in chapter 12 and subchapter V of chapter 11.

Doll Amicus




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