Summary:
Trustee Gold requested a trustee commission, pursuant to 11 U.S.C. § 330(a)(7), based on the percentages set forth in § 326(a), of $17,254.61. The bankruptcy court, finding that Gold had failed to timely complete his duties, reduced the fee to $8,020.00, based on his reasonable hourly services.
The Court of Appeals started from finding that BAPCPA added § 330(a)(7) and instructs that, “[i]n determining the amount of reasonable compensation to be awarded to a trustee, the court shall treat such compensation as a commission, based on section 326.” (Emphasis added.) It contrasted the “shall” of § 330(a)(7) with the “may” used elsewhere in § 330(a). Accordingly, absent extraordinary circumstances, a Chapter 7 Trustee’s commission must be based on the calculated commission. The 4th Circuit found that extraordinary circumstances justified a departure from the calculated commission by “synthesizing” the permissive reduction in § 330(a)(2) with the mandatory § 330(a)(7).
In determining whether to depart from the calculated commission, the bankruptcy court is required to first calculate such commission and only then determine, with detailed findings of fact, if extraordinary circumstances rendered such unreasonable.
Commentary:
This is in some sense a counterpoint to Law v. Segel, in that it found that the trustee’s commission was, if not quite as sacrosanct as an exemption from surcharge, still protected against all but the most extraordinary failures by a trustee. Unmentioned here, but directly raised in Law, is that the bankruptcy courts and the United States Trustee (or in North Carolina, the Bankruptcy Administrator) have other options for dealing with trustee failings, including removal of the negligent trustee from the panel or using § 105 to sanction a trustee for failures under § 704. Such options may be harsher and could cause a trustee to regret the loss of this monetary penalty.
For a copy of the opinion, please see:
Gold v. Robbins- Commission for Chapter 7 Trustee
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