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In re Buffets, LLC

United States Bankruptcy Court for the Western District of Texas, San Antonio Division

February 8, 2019, Decided

CASE NO. 16-50557-RBK, CHAPTER 11

Opinion

 [*591]  Buffets, LLC, and its affiliates1 ("Debtors" or, post-confirmation, "Reorganized Debtors") filed voluntary chapter 11 petitions on March 7, 2016. On April 27, 2017, the Debtors confirmed a plan and were substantively consolidated. The plan and confirmation order provide for payment of quarterly fees to the United States trustee (UST). In October 2017, Congress amended Title 28, section 1930, to provide for an 833 percent increase in the maximum post-confirmation quarterly fees payable by certain chapter 11 debtors with disbursements that equal or exceed $1 million when the UST System Fund balance is less than $200 million. 28 U.S.C. § 1930(a)(6)(B) (2018). The UST System Fund balance currently is less than $200 million, and the Reorganized Debtors' 2018 disbursements exceed $1 million in every quarter. See U. S. Dep't of Justice, [**3]  Exec. Office of U.S. Trustees, Chapter 11 Quarterly Fees, https://www.justice.gov/ust/chapter-11-quarterly-fees.

The principals of the Reorganized Debtors were shocked by the quarterly fee increase. The Reorganized Debtors filed a motion requesting an order establishing the quarterly-fee liability in the amount of $4,875 and determining the word "disbursements" in § 1930(a)(6) is limited to funds disbursed as priority and administrative expense claims, claims of creditors, and interests of equity security holders pursuant to the plan.

In response, the UST filed an objection to the motion. The UST argued that the Reorganized Debtors' interpretation of the term "disbursements" contravenes the word's plain meaning and relevant case law. The UST asked the Court to deny the Reorganized Debtors' motion and set liability for the quarterly fees at $250,000. The Court held a hearing and heard argument from the Reorganized Debtors and the UST. After the hearing, but before the ruling, the [**4]  UST filed a supplemental brief in support of the objection. The Reorganized Debtors filed a supplemental brief, arguing that the amendment amounts to an unconstitutional violation of the Due Process Clause.

 [*592]  The Court later made findings of fact and conclusions of law, which were stated on the record pursuant to Fed. R. Bankr. P. 7052 and 9014, and rendered an order denying the Reorganized Debtors' motion. The Court held that the quarterly fees should be calculated based upon all disbursements made during the quarter. The Reorganized Debtors filed a motion to reconsider the order in light of constitutional violations and a recent opinion from the Western District of Wisconsin, In re Cranberry Growers Coop., 592 B.R. 325 (Bankr. W.D. Wis. 2018) (direct appeal filed).

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597 B.R. 588 *; 2019 Bankr. LEXIS 396 **; 66 Bankr. Ct. Dec. 212; 2019 WL 518318

IN RE: BUFFETS, LLC, et al., DEBTORS

CORE TERMS

Reorganized, UST, disbursements, quarterly, retroactively, districts, confirmation, post-confirmation, cases, fees payable, programs, violates, funding, parties

Bankruptcy Law, Case Administration, Examiners, Officers & Trustees, United States Trustee, Constitutional Law, Congressional Duties & Powers, Spending & Taxation, Supremacy Clause, Supreme Law of the Land, Governments, Legislation, Effect & Operation, Retrospective Operation, Fundamental Rights, Procedural Due Process, Scope of Protection, Plans, Postconfirmation Effects, Effects of Confirmation, Effect & Operation