Article I, Section 8, Clause 4 of the United States Constitution contains the “Bankruptcy Clause,” which vests Congress with the power to establish “uniform Laws on the subject of Bankruptcies throughout the United States.” The clause’s requirement that the bankruptcy laws be “uniform” is not a strictly construed requirement as Congress reserves the right to draft legislation depending on different regional issues that arise within the bankruptcy system.
Congress created the United States Trustee Program (USTP) to, among other things, oversee the administration of bankruptcy cases and promote the integrity and efficiency of bankruptcy system for the benefit of all creditors, debtors, and the public. Congress, nevertheless, has permitted six judicial districts in North Carolina and Alabama to opt out of the USTP. In these districts, the administration of bankruptcy cases is overseen by an alternative program, the Administrator Program. The USTP is funded in its entirety by user paid fees to the United States Trustee Fund (USTF), which is largely comprised of fees paid by debtors who file cases under Chapter 11 of the Bankruptcy Code. In contrast, the Administrator Program is funded by the judiciary general budget, but Congress allowed the United States Judicial Conference to require debtors in the Administrator Program to pay quarterly fees equal to those imposed in the Trustee Program Districts.
This article will examine the issue of whether Congress’ enactment of a significant fee increase in bankruptcy fees applicable to large Chapter 11 cases in United States Trustee Program districts, but not to cases in the Administrator Program districts, violates the uniformity requirement of the Bankruptcy Clause of the U.S. Constitution. Part I of this article will discuss Siegel v. Fitzgerald, in which the Court held that this type of fee increase is unconstitutional. Part II analyzes the Circuit Courts’ decisions that have addressed the possible remedies for the unconstitutional overpayments.