Contact: John Hartgen
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(703) 739-0800
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href='mailto:jhartgen@abiworld.org'>
color='#0000ff' size='3'>jhartgen@abiworld.org
BANKRUPTCY
CODE DOES NOT AUTHORIZE SURPLUSES IN CHAPTER 7 CASES TO BE PAID AS
INTEREST ON TRUSTEE COMPENSATION, ACCORDING TO LATEST ABI QUICK
POLL
size='3'>July 21, 2008, Alexandria, Va.
size='3'>— A majority of respondents in a recent ABI Quick Poll
strongly agreed that §
size='3'>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
size='3'>§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. (
face='Times New Roman' size='3'>Clippard v. Crocker
size='3'>, 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,
href='http://www.abiworld.org/'>
size='3'>www.abiworld.org
size='3'>. ABI members and the public are invited to respond to a
question on a timely bankruptcy or insolvency issue. Visit
href='http://www.abiworld.net/quickpoll/'>
color='#0000ff' size='3'>http://www.abiworld.net/quickpoll/
to access the results of previous
ABI Quick Polls.
###
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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
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visit
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color='#0000ff'>http://www.abiworld.org/conferences.html.