Bankruptcy Code Does Not Authorize Surpluses in Chapter 7 Cases to Be Paid as Interest on Trustee Compensation According to Latest ABI Quick Poll
Contact: John Hartgen
BANKRUPTCY CODE DOES NOT AUTHORIZE SURPLUSES IN CHAPTER 7 CASES TO BE PAID AS INTEREST ON TRUSTEE COMPENSATION, ACCORDING TO LATEST ABI QUICK POLL
July 21, 2008, Alexandria, Va. — A majority of respondents in a recent ABI Quick Poll strongly agreed that §726(a)(5) of the Bankruptcy Code does not allow for a surplus from a chapter 7 case to be applied as interest to a trustee’s compensation. Forty-eight percent of respondents “strongly agreed” and 16 percent “somewhat agreed.”
Twenty-five percent of respondents, however, thought that §726(a)(5) does authorize surplus capital from a chapter 7 case to be applied as interest to a trustee’s compensation. Fourteen percent “disagreed strongly” and 11 percent “somewhat disagreed” with the statement that “Section 726(a)(5) does not authorize interest on trustee compensation in a surplus Chapter 7 case. (Clippard v. Crocker, M.D. Tenn. 2008).” Eight percent of respondents did not know or had no opinion on the issue.
In the case of Clippard v. Crocker(M.D. Tenn. 2008), the chapter 7 trustee sought payment of interest on his compensation and on his attorneys’ fees and expenses from a surplus that was due to be paid to the debtor. Agreeing with the objection of the U.S. Trustee and reversing an earlier bankruptcy court ruling, the U.S. District Court for the Middle District of Tennessee held that neither trustee compensation nor that of the trustee’s attorney was eligible to receive interest from the surplus in the chapter 7 case.
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,700 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.