The United States Trustee Program is responsible for the efficient administration of bankruptcy cases throughout most of the country. Since 1986, the Trustee Program has covered all states except North Carolina and Alabama, where an Administrator Program oversees bankruptcy filings instead. Although there are many similarities between the two programs, there is a significant difference in the funding structure. The Trustee Program is entirely self-funded through quarterly fees paid by debtors that file in the Trustee Program districts. In contrast, the Administrator Program is funded through the judiciary’s general budget.
Debtors in the Administrator Program districts pay quarterly fees as well, but those fees offset the judicial branch disbursements rather than directly funding the program. When quarterly fees were enacted in the Administrator Program, the Judicial Conference, which oversees the Administrator Program, entered a standing order requiring the Administrator Program’s fees to be the same as the fees charged to similarly situated debtors in the Trustee Program.
However, in 2017, Congress enacted a temporary fee increase for large chapter 11 cases in the Trustee Program districts. The fee increase began on January 1, 2018, and it applied to all newly filed and pending cases. Despite the Judicial Conference’s standing order, a corresponding fee increase did not take effect in the Administrator Program districts until October 1, 2018, and then it only applied to newly filed cases.
In June 2022, the Supreme Court of the United States heard a challenge to this disparate treatment. See Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022). In Siegel, a liquidating trustee argued that the fee increase violated the United States Constitution because it did not apply uniformly across the country. The Supreme Court agreed and found that the Article I of the U.S. Constitution required uniformity in bankruptcy laws, but the Court’s ruling did not specify a remedy for the constitutional violation.