In a previous blog post from June 2022, we discussed the Tenth Circuit’s post-Sigel decision in John Q. Hammons Fall 2006 LLC v. U.S. Trustee (In re John Q. Hammons Fall 2006 LLC), 15 F.4th 1011 (10th Cir. Oct. 5, 2021), which held that the government must pay a refund to a Chapter 11 debtor based on what the debtor would have paid over the same time were the case in a Bankruptcy Administrator district. In that opinion, the Tenth Circuit mandated a refund in part because the appeals court had no jurisdiction over the two states with Bankruptcy Administrators and thus could not require debtors in those states to pay the higher fees. See Post Siegel Ruling: Tenth Circuit Orders Refunds for Overpayment of U.S. Trustee Fees.

Another circuit court has now joined the Tenth Circuit in reaching the same conclusion. On Nov. 10, 2022, the Second Circuit, in In re Clinton Nurseries, Inc., 53 F.4th 15, 29 (2d Cir. 2022), essentially re-adopted its earlier decision from May of 2021, see In re Clinton Nurseries, Inc., 998 F.3d 56 (2d Cir. 2021), and again held that the debtor was entitled to a refund from the U.S. Trustee.

The decisions from the Second and Tenth Circuits are important for former Chapter 11 debtors throughout the country in as much as a class action is pending in the U.S. Court of Federal Claims in Washington, D.C. There, the court dismissed the class action brought by debtors in U.S. trustee program states challenging higher fees as nonuniform. See Acadiana Mgmt. Grp., LLC v. United States, 151 Fed. Cl. 121 (Ct. Cl. 2020).

That decision is currently on appeal to the U.S. Court of Appeals for the Federal Circuit. See Case No. 21-1941.

If the class action holds up — as one would suspect it will in light of the Supreme Court's decision in Siegel — and the Court of Claims and the Federal Circuit follow the Tenth Circuit, Chapter 11 debtors across the country would be entitled to refunds.