A quirk in federal law made going bankrupt in Alabama and North Carolina cheaper than in any other state, spurring a lawsuit that says the government has been overcharging everywhere else and violating the Constitution, Bloomberg News reported. The U.S. government increased the fees it charges the largest bankrupt companies for chapter 11 filings by over 700 percent in 2017, but let debtors in those two states keep on paying the older and cheaper fees, according to a Louisiana hospital chain that sued on April 3. The vast discrepancy meant the federal government overcharged companies struggling with insolvency by about $155 million last year, according to the lawyer who filed the suit. The court case, which seeks to be certified as a class action for an estimated 600 to 1,000 members, demands that the fee increase be declared unconstitutional and that the U.S. give refunds. The fees help fund the U.S. Trustee Program, a unit of the Department of Justice that serves as a watchdog over bankruptcies.
