Justices Lob Bankruptcy Fee ‘Blank Slate’ Over to Lower Courts

Federal courts and debtors have been left to grapple with the impact of a US Supreme Court ruling that the structuring of fees bankrupt debtors pay to the US Trustee was unconstitutional.

Congress enacted a hike in Chapter 11 fees beginning in 2018 to address a budgetary shortfall for the US Trustee, the Justice Department’s bankruptcy watchdog. But because the increase didn’t affect debtors in the states of Alabama and North Carolina—where the US Trustee doesn’t operate—the hike violated a constitutional provision requiring uniform federal bankruptcy laws, the high court said June 6 in Siegel v. Fitzgerald.

The Supreme ...