-CITE- 11 USC CHAPTER 3 - CASE ADMINISTRATION 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION -HEAD- CHAPTER 3 - CASE ADMINISTRATION -MISC1- SUBCHAPTER I - COMMENCEMENT OF A CASE Sec. 301. Voluntary cases. 302. Joint cases. 303. Involuntary cases. [304. Repealed.] 305. Abstention. 306. Limited appearance. 307. United States trustee. 308. Debtor reporting requirements. SUBCHAPTER II - OFFICERS 321. Eligibility to serve as trustee. 322. Qualification of trustee. 323. Role and capacity of trustee. 324. Removal of trustee or examiner. 325. Effect of vacancy. 326. Limitation on compensation of trustee. 327. Employment of professional persons. 328. Limitation on compensation of professional persons. 329. Debtor's transactions with attorneys. 330. Compensation of officers. 331. Interim compensation. 332. Consumer privacy ombudsman. 333. Appointment of ombudsman.(!1) SUBCHAPTER III - ADMINISTRATION 341. Meetings of creditors and equity security holders. 342. Notice. 343. Examination of the debtor. 344. Self-incrimination; immunity. 345. Money of estates. 346. Special provisions related to the treatment of State and local taxes. 347. Unclaimed property. 348. Effect of conversion. 349. Effect of dismissal. 350. Closing and reopening cases. 351. Disposal of patient records. SUBCHAPTER IV - ADMINISTRATIVE POWERS 361. Adequate protection. 362. Automatic stay. 363. Use, sale, or lease of property. 364. Obtaining credit. 365. Executory contracts and unexpired leases. 366. Utility service. AMENDMENTS 2005 - Pub. L. 109-8, title II, Sec. 232(c), title IV, Sec. 434(a)(2), title VII, Sec. 719(a)(2), title VIII, Sec. 802(d)(4), title XI, Secs. 1102(b), 1104(a)(2), Apr. 20, 2005, 119 Stat. 74, 111, 133, 146, 190, 192, added items 308, 332, 333, and 351, substituted "Special provisions related to the treatment of State and local taxes" for "Special tax provisions" in item 346, and struck out item 304 "Cases ancillary to foreign proceedings". 1986 - Pub. L. 99-554, title II, Sec. 205(b), Oct. 27, 1986, 100 Stat. 3098, added item 307. -FOOTNOTE- (!1) So in original. Does not conform to section catchline. -End- -CITE- 11 USC SUBCHAPTER I - COMMENCEMENT OF A CASE 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- SUBCHAPTER I - COMMENCEMENT OF A CASE -End- -CITE- 11 USC Sec. 301 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 301. Voluntary cases -STATUTE- (a) A voluntary case under a chapter of this title is commenced by the filing with the bankruptcy court of a petition under such chapter by an entity that may be a debtor under such chapter. (b) The commencement of a voluntary case under a chapter of this title constitutes an order for relief under such chapter. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2558; Pub. L. 109-8, title V, Sec. 501(b), Apr. 20, 2005, 119 Stat. 118.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Sections 301, 302, 303, and 304 are all modified in the House amendment to adopt an idea contained in sections 301 and 303 of the Senate amendment requiring a petition commencing a case to be filed with the bankruptcy court. The exception contained in section 301 of the Senate bill relating to cases filed under chapter 9 is deleted. Chapter 9 cases will be handled by a bankruptcy court as are other title 11 cases. SENATE REPORT NO. 95-989 Section 301 specifies the manner in which a voluntary bankruptcy case is commenced. The debtor files a petition under this section under the particular operative chapter of the bankruptcy code under which he wishes to proceed. The filing of the petition constitutes an order for relief in the case under that chapter. The section contains no change from current law, except for the use of the phrase "order for relief" instead of "adjudication." The term adjudication is replaced by a less pejorative phrase in light of the clear power of Congress to permit voluntary bankruptcy without the necessity for an adjudication, as under the 1898 act [former title 11], which was adopted when voluntary bankruptcy was a concept not thoroughly tested. AMENDMENTS 2005 - Pub. L. 109-8 designated existing provisions as subsec. (a), struck out "The commencement of a voluntary case under a chapter of this title constitutes an order for relief under such chapter." at end, and added subsec. (b). EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 302 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 302. Joint cases -STATUTE- (a) A joint case under a chapter of this title is commenced by the filing with the bankruptcy court of a single petition under such chapter by an individual that may be a debtor under such chapter and such individual's spouse. The commencement of a joint case under a chapter of this title constitutes an order for relief under such chapter. (b) After the commencement of a joint case, the court shall determine the extent, if any, to which the debtors' estates shall be consolidated. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2558.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 A joint case is a voluntary bankruptcy case concerning a wife and husband. Under current law, there is no explicit provision for joint cases. Very often, however, in the consumer debtor context, a husband and wife are jointly liable on their debts, and jointly hold most of their property. A joint case will facilitate consolidation of their estates, to the benefit of both the debtors and their creditors, because the cost of administration will be reduced, and there will be only one filing fee. Section 302 specifies that a joint case is commenced by the filing of a petition under an appropriate chapter by an individual and that individual's spouse. Thus, one spouse cannot take the other into bankruptcy without the other's knowledge or consent. The filing of the petition constitutes an order for relief under the chapter selected. Subsection (b) requires the court to determine the extent, if any, to which the estates of the two debtors will be consolidated; that is, assets and liabilities combined in a single pool to pay creditors. Factors that will be relevant in the court's determination include the extent of jointly held property and the amount of jointly-owned debts. The section, of course, is not license to consolidate in order to avoid other provisions of the title to the detriment of either the debtors or their creditors. It is designed mainly for ease of administration. -End- -CITE- 11 USC Sec. 303 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 303. Involuntary cases -STATUTE- (a) An involuntary case may be commenced only under chapter 7 or 11 of this title, and only against a person, except a farmer, family farmer, or a corporation that is not a moneyed, business, or commercial corporation, that may be a debtor under the chapter under which such case is commenced. (b) An involuntary case against a person is commenced by the filing with the bankruptcy court of a petition under chapter 7 or 11 of this title - (1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $10,000 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims; (2) if there are fewer than 12 such holders, excluding any employee or insider of such person and any transferee of a transfer that is voidable under section 544, 545, 547, 548, 549, or 724(a) of this title, by one or more of such holders that hold in the aggregate at least $10,000 of such claims; (3) if such person is a partnership - (A) by fewer than all of the general partners in such partnership; or (B) if relief has been ordered under this title with respect to all of the general partners in such partnership, by a general partner in such partnership, the trustee of such a general partner, or a holder of a claim against such partnership; or (4) by a foreign representative of the estate in a foreign proceeding concerning such person. (c) After the filing of a petition under this section but before the case is dismissed or relief is ordered, a creditor holding an unsecured claim that is not contingent, other than a creditor filing under subsection (b) of this section, may join in the petition with the same effect as if such joining creditor were a petitioning creditor under subsection (b) of this section. (d) The debtor, or a general partner in a partnership debtor that did not join in the petition, may file an answer to a petition under this section. (e) After notice and a hearing, and for cause, the court may require the petitioners under this section to file a bond to indemnify the debtor for such amounts as the court may later allow under subsection (i) of this section. (f) Notwithstanding section 363 of this title, except to the extent that the court orders otherwise, and until an order for relief in the case, any business of the debtor may continue to operate, and the debtor may continue to use, acquire, or dispose of property as if an involuntary case concerning the debtor had not been commenced. (g) At any time after the commencement of an involuntary case under chapter 7 of this title but before an order for relief in the case, the court, on request of a party in interest, after notice to the debtor and a hearing, and if necessary to preserve the property of the estate or to prevent loss to the estate, may order the United States trustee to appoint an interim trustee under section 701 of this title to take possession of the property of the estate and to operate any business of the debtor. Before an order for relief, the debtor may regain possession of property in the possession of a trustee ordered appointed under this subsection if the debtor files such bond as the court requires, conditioned on the debtor's accounting for and delivering to the trustee, if there is an order for relief in the case, such property, or the value, as of the date the debtor regains possession, of such property. (h) If the petition is not timely controverted, the court shall order relief against the debtor in an involuntary case under the chapter under which the petition was filed. Otherwise, after trial, the court shall order relief against the debtor in an involuntary case under the chapter under which the petition was filed, only if - (1) the debtor is generally not paying such debtor's debts as such debts become due unless such debts are the subject of a bona fide dispute as to liability or amount; or (2) within 120 days before the date of the filing of the petition, a custodian, other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of the debtor for the purpose of enforcing a lien against such property, was appointed or took possession. (i) If the court dismisses a petition under this section other than on consent of all petitioners and the debtor, and if the debtor does not waive the right to judgment under this subsection, the court may grant judgment - (1) against the petitioners and in favor of the debtor for - (A) costs; or (B) a reasonable attorney's fee; or (2) against any petitioner that filed the petition in bad faith, for - (A) any damages proximately caused by such filing; or (B) punitive damages. (j) Only after notice to all creditors and a hearing may the court dismiss a petition filed under this section - (1) on the motion of a petitioner; (2) on consent of all petitioners and the debtor; or (3) for want of prosecution. [(k) Repealed. Pub. L. 109-8, title VIII, Sec. 802(d)(2), Apr. 20, 2005, 119 Stat. 146.] (l)(1) If - (A) the petition under this section is false or contains any materially false, fictitious, or fraudulent statement; (B) the debtor is an individual; and (C) the court dismisses such petition, the court, upon the motion of the debtor, shall seal all the records of the court relating to such petition, and all references to such petition. (2) If the debtor is an individual and the court dismisses a petition under this section, the court may enter an order prohibiting all consumer reporting agencies (as defined in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f))) from making any consumer report (as defined in section 603(d) of that Act) that contains any information relating to such petition or to the case commenced by the filing of such petition. (3) Upon the expiration of the statute of limitations described in section 3282 of title 18, for a violation of section 152 or 157 of such title, the court, upon the motion of the debtor and for good cause, may expunge any records relating to a petition filed under this section. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2559; Pub. L. 98-353, title III, Secs. 426, 427, July 10, 1984, 98 Stat. 369; Pub. L. 99-554, title II, Secs. 204, 254, 283(b), Oct. 27, 1986, 100 Stat. 3097, 3105, 3116; Pub. L. 103-394, title I, Sec. 108(b), Oct. 22, 1994, 108 Stat. 4112; Pub. L. 109-8, title III, Sec. 332(b), title VIII, Sec. 802(d)(2), title XII, Sec. 1234(a), Apr. 20, 2005, 119 Stat. 103, 146, 204.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 303(b)(1) is modified to make clear that unsecured claims against the debtor must be determined by taking into account liens securing property held by third parties. Section 303(b)(3) adopts a provision contained in the Senate amendment indicating that an involuntary petition may be commenced against a partnership by fewer than all of the general partners in such partnership. Such action may be taken by fewer than all of the general partners notwithstanding a contrary agreement between the partners or State or local law. Section 303(h)(1) in the House amendment is a compromise of standards found in H.R. 8200 as passed by the House and the Senate amendment pertaining to the standards that must be met in order to obtain an order for relief in an involuntary case under title 11. The language specifies that the court will order such relief only if the debtor is generally not paying debtor's debts as they become due. Section 303(h)(2) reflects a compromise pertaining to section 543 of title 11 relating to turnover of property by a custodian. It provides an alternative test to support an order for relief in an involuntary case. If a custodian, other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of the debtor for the purpose of enforcing a lien against such property, was appointed or took possession within 120 days before the date of the filing of the petition, then the court may order relief in the involuntary case. The test under section 303(h)(2) differs from section 3a(5) of the Bankruptcy Act [section 21(a)(5) of former title 11], which requires an involuntary case to be commenced before the earlier of time such custodian was appointed or took possession. The test in section 303(h)(2) authorizes an order for relief to be entered in an involuntary case from the later date on which the custodian was appointed or took possession. SENATE REPORT NO. 95-989 Section 303 governs the commencement of involuntary cases under title 11. An involuntary case may be commenced only under chapter 7, Liquidation, or chapter 11, Reorganization. Involuntary cases are not permitted for municipalities, because to do so may constitute an invasion of State sovereignty contrary to the 10th amendment, and would constitute bad policy, by permitting the fate of a municipality, governed by officials elected by the people of the municipality, to be determined by a small number of creditors of the municipality. Involuntary chapter 13 cases are not permitted either. To do so would constitute bad policy, because chapter 13 only works when there is a willing debtor that wants to repay his creditors. Short of involuntary servitude, it is difficult to keep a debtor working for his creditors when he does not want to pay them back. See chapter 3, supra. The exceptions contained in current law that prohibit involuntary cases against farmers, ranchers and eleemosynary institutions are continued. Farmers and ranchers are excepted because of the cyclical nature of their business. One drought year or one year of low prices, as a result of which a farmer is temporarily unable to pay his creditors, should not subject him to involuntary bankruptcy. Eleemosynary institutions, such as churches, schools, and charitable organizations and foundations, likewise are exempt from involuntary bankruptcy. The provisions for involuntary chapter 11 cases is a slight change from present law, based on the proposed consolidation of the reorganization chapters. Currently, involuntary cases are permitted under chapters X and XII [chapters 10 and 12 of former title 11] but not under chapter XI [chapter 11 of former title 11]. The consolidation requires a single rule for all kinds of reorganization proceedings. Because the assets of an insolvent debtor belong equitably to his creditors, the bill permits involuntary cases in order that creditors may realize on their assets through reorganization as well as through liquidation. Subsection (b) of the section specifies who may file an involuntary petition. As under current law, if the debtor has more than 12 creditors, three creditors must join in the involuntary petition. The dollar amount limitation is changed from current law to $5,000. The new amount applies both to liquidation and reorganization cases in order that there not be an artificial difference between the two chapters that would provide an incentive for one or the other. Subsection (b)(1) makes explicit the right of an indenture trustee to be one of the three petitioning creditors on behalf of the creditors the trustee represents under the indenture. If all of the general partners in a partnership are in bankruptcy, then the trustee of a single general partner may file an involuntary petition against the partnership. Finally, a foreign representative may file an involuntary case concerning the debtor in the foreign proceeding, in order to administer assets in this country. This subsection is not intended to overrule Bankruptcy Rule 104(d), which places certain restrictions on the transfer of claims for the purpose of commencing an involuntary case. That Rule will be continued under section 405(d) of this bill. Subsection (c) permits creditors other than the original petitioning creditors to join in the petition with the same effect as if the joining creditor had been one of the original petitioning creditors. Thus, if the claim of one of the original petitioning creditors is disallowed, the case will not be dismissed for want of three creditors or want of $5,000 in petitioning claims if the joining creditor suffices to fulfill the statutory requirements. Subsection (d) permits the debtor to file an answer to an involuntary petition. The subsection also permits a general partner in a partnership debtor to answer an involuntary petition against the partnership if he did not join in the petition. Thus, a partnership petition by less than all of the general partners is treated as an involuntary, not a voluntary, petition. The court may, under subsection (e), require the petitioners to file a bond to indemnify the debtor for such amounts as the court may later allow under subsection (i). Subsection (i) provides for costs, attorneys fees, and damages in certain circumstances. The bonding requirement will discourage frivolous petitions as well as spiteful petitions based on a desire to embarrass the debtor (who may be a competitor of a petitioning creditor) or to put the debtor out of business without good cause. An involuntary petition may put a debtor out of business even if it is without foundation and is later dismissed. Subsection (f) is both a clarification and a change from existing law. It permits the debtor to continue to operate any business of the debtor and to dispose of property as if the case had not been commenced. The court is permitted, however, to control the debtor's powers under this subsection by appropriate orders, such as where there is a fear that the debtor may attempt to abscond with assets, dispose of them at less than their fair value, or dismantle his business, all to the detriment of the debtor's creditors. The court may also, under subsection (g), appoint an interim trustee to take possession of the debtor's property and to operate any business of the debtor, pending trial on the involuntary petition. The court may make such an order only on the request of a party in interest, and after notice to the debtor and a hearing. There must be a showing that a trustee is necessary to preserve the property of the estate or to prevent loss to the estate. The debtor may regain possession by posting a sufficient bond. Subsection (h) provides the standard for an order for relief on an involuntary petition. If the petition is not timely controverted (the Rules of Bankruptcy Procedure will fix time limits), the court orders relief after a trial, only if the debtor is generally unable to pay its debts as they mature, or if the debtor has failed to pay a major portion of his debts as they become due, or if a custodian was appointed during the 90-day period preceding the filing of the petition. The first two tests are variations of the equity insolvency test. They represent the most significant departure from present law concerning the grounds for involuntary bankruptcy, which requires an act of bankruptcy. Proof of the commission of an act of bankruptcy has frequently required a showing that the debtor was insolvent on a "balance-sheet" test when the act was committed. This bill abolishes the concept of acts of bankruptcy. The equity insolvency test has been in equity jurisprudence for hundreds of years, and though it is new in the bankruptcy context (except in chapter X [chapter 10 of former title 11]), the bankruptcy courts should have no difficulty in applying it. The third test, appointment of a custodian within ninety days before the petition, is provided for simplicity. It is not a partial re- enactment of acts of bankruptcy. If a custodian of all or substantially all of the property of the debtor has been appointed, this paragraph creates an irrebuttable presumption that the debtor is unable to pay its debts as they mature. Moreover, once a proceeding to liquidate assets has been commenced, the debtor's creditors have an absolute right to have the liquidation (or reorganization) proceed in the bankruptcy court and under the bankruptcy laws with all of the appropriate creditor and debtor protections that those laws provide. Ninety days gives creditors ample time in which to seek bankruptcy liquidation after the appointment of a custodian. If they wait beyond the ninety day period, they are not precluded from filing an involuntary petition. They are simply required to prove equity insolvency rather than the more easily provable custodian test. Subsection (i) permits the court to award costs, reasonable attorney's fees, or damages if an involuntary petition is dismissed other than by consent of all petitioning creditors and the debtor. The damages that the court may award are those that may be caused by the taking of possession of the debtor's property under subsection (g) or section 1104 of the bankruptcy code. In addition, if a petitioning creditor filed the petition in bad faith, the court may award the debtor any damages proximately caused by the filing of the petition. These damages may include such items as loss of business during and after the pendency of the case, and so on. "Or" is not exclusive in this paragraph. The court may grant any or all of the damages provided for under the provision. Dismissal in the best interests of credits under section 305(a)(1) would not give rise to a damages claim. Under subsection (j), the court may dismiss the petition by consent only after giving notice to all creditors. The purpose of the subsection is to prevent collusive settlements among the debtor and the petitioning creditors while other creditors, that wish to see relief ordered with respect to the debtor but that did not participate in the case, are left without sufficient protection. Subsection (k) governs involuntary cases against foreign banks that are not engaged in business in the United States but that have assets located here. The subsection prevents a foreign bank from being placed into bankruptcy in this country unless a foreign proceeding against the bank is pending. The special protection afforded by this section is needed to prevent creditors from effectively closing down a foreign bank by the commencement of an involuntary bankruptcy case in this country unless that bank is involved in a proceeding under foreign law. An involuntary case commenced under this subsection gives the foreign representative an alternative to commencing a case ancillary to a foreign proceeding under section 304. AMENDMENTS 2005 - Subsec. (b)(1). Pub. L. 109-8, Sec. 1234(a)(1), inserted "as to liability or amount" after "bona fide dispute" and substituted "if such noncontingent, undisputed claims" for "if such claims". Subsec. (h)(1). Pub. L. 109-8, Sec. 1234(a)(2), inserted "as to liability or amount" before semicolon. Subsec. (k). Pub. L. 109-8, Sec. 802(d)(2), struck out subsec. (k) which read as follows: "Notwithstanding subsection (a) of this section, an involuntary case may be commenced against a foreign bank that is not engaged in such business in the United States only under chapter 7 of this title and only if a foreign proceeding concerning such bank is pending." Subsec. (l). Pub. L. 109-8, Sec. 332(b), added subsec. (l). 1994 - Subsec. (b). Pub. L. 103-394 substituted "$10,000" for "$5,000" in pars. (1) and (2). 1986 - Subsec. (a). Pub. L. 99-554, Sec. 254, inserted reference to family farmer. Subsec. (b). Pub. L. 99-554, Sec. 283(b)(1), substituted "subject of" for "subject on". Subsec. (g). Pub. L. 99-554, Sec. 204(1), substituted "may order the United States trustee to appoint" for "may appoint". Subsec. (h)(1). Pub. L. 99-554, Sec. 283(b)(2), substituted "are the" for "that are the". Subsec. (i)(1). Pub. L. 99-554, Sec. 204(2), inserted "or" at end of subpar. (A) and struck out subpar. (C) which read as follows: "any damages proximately caused by the taking of possession of the debtor's property by a trustee appointed under subsection (g) of this section or section 1104 of this title; or". 1984 - Subsec. (b). Pub. L. 98-353, Sec. 426(a), inserted "against a person" after "involuntary case". Subsec. (b)(1). Pub. L. 98-353, Sec. 426(b)(1), inserted "or the subject on a bona fide dispute,". Subsec. (h)(1). Pub. L. 98-353, Sec. 426(b)(2), inserted "unless such debts that are the subject of a bona fide dispute". Subsec. (j)(2). Pub. L. 98-353, Sec. 427, substituted "debtor" for "debtors". EFFECTIVE DATE OF 2005 AMENDMENT Pub. L. 109-8, title XII, Sec. 1234(b), Apr. 20, 2005, 119 Stat. 204, provided that: "This section [amending this section] and the amendments made by this section shall take effect on the date of the enactment of this Act [Apr. 20, 2005] and shall apply with respect to cases commenced under title 11 of the United States Code before, on, and after such date." Amendment by sections 332(b) and 802(d)(2) of Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109- 8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by section 204 of Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 254 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554. Amendment by section 283 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, see section 302(a) of Pub. L. 99-554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by sections 426(a) and 427 of Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, and amendment by section 426(b) of Pub. L. 98-353 effective July 10, 1984, see section 552(a), (b) of Pub. L. 98-353, set out as a note under section 101 of this title. ADJUSTMENT OF DOLLAR AMOUNTS For adjustment of dollar amounts specified in subsec. (b)(1), (2) of this section by the Judicial Conference of the United States, see note set out under section 104 of this title. -End- -CITE- 11 USC Sec. 304 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 304. Repealed. -MISC1- [Sec. 304. Repealed. Pub. L. 109-8, title VIII, Sec. 802(d)(3), Apr. 20, 2005, 119 Stat. 146]. Section, Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2560, related to cases ancillary to foreign proceedings. EFFECTIVE DATE OF REPEAL Repeal effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as an Effective Date of 2005 Amendment note under section 101 of this title. -End- -CITE- 11 USC Sec. 305 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 305. Abstention -STATUTE- (a) The court, after notice and a hearing, may dismiss a case under this title, or may suspend all proceedings in a case under this title, at any time if - (1) the interests of creditors and the debtor would be better served by such dismissal or suspension; or (2)(A) a petition under section 1515 for recognition of a foreign proceeding has been granted; and (B) the purposes of chapter 15 of this title would be best served by such dismissal or suspension. (b) A foreign representative may seek dismissal or suspension under subsection (a)(2) of this section. (c) An order under subsection (a) of this section dismissing a case or suspending all proceedings in a case, or a decision not so to dismiss or suspend, is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of title 28 or by the Supreme Court of the United States under section 1254 of title 28. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2561; Pub. L. 101-650, title III, Sec. 309(a), Dec. 1, 1990, 104 Stat. 5113; Pub. L. 102- 198, Sec. 5, Dec. 9, 1991, 105 Stat. 1623; Pub. L. 109-8, title VIII, Sec. 802(d)(6), Apr. 20, 2005, 119 Stat. 146.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 A principle of the common law requires a court with jurisdiction over a particular matter to take jurisdiction. This section recognizes that there are cases in which it would be appropriate for the court to decline jurisdiction. Abstention under this section, however, is of jurisdiction over the entire case. Abstention from jurisdiction over a particular proceeding in a case is governed by proposed 28 U.S.C. 1471(c). Thus, the court is permitted, if the interests of creditors and the debtor would be better served by dismissal of the case or suspension of all proceedings in the case, to so order. The court may dismiss or suspend under the first paragraph, for example, if an arrangement is being worked out by creditors and the debtor out of court, there is no prejudice to the results of creditors in that arrangement, and an involuntary case has been commenced by a few recalcitrant creditors to provide a basis for future threats to extract full payment. The less expensive out-of-court workout may better serve the interests in the case. Likewise, if there is pending a foreign proceeding concerning the debtor and the factors specified in proposed 11 U.S.C. 304(c) warrant dismissal or suspension, the court may so act. Subsection (b) gives a foreign representative authority to appear in the bankruptcy court to request dismissal or suspension. Subsection (c) makes the dismissal or suspension order nonreviewable by appeal or otherwise. The bankruptcy court, based on its experience and discretion is vested with the power of decision. AMENDMENTS 2005 - Subsec. (a)(2). Pub. L. 109-8 added par. (2) and struck out former par. (2) which read as follows: "(2)(A) there is pending a foreign proceeding; and "(B) the factors specified in section 304(c) of this title warrant such dismissal or suspension." 1991 - Subsec. (c). Pub. L. 102-198 substituted "title 28" for "this title" in two places. 1990 - Subsec. (c). Pub. L. 101-650 inserted before period at end "by the court of appeals under section 158(d), 1291, or 1292 of this title or by the Supreme Court of the United States under section 1254 of this title". EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 306 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 306. Limited appearance -STATUTE- An appearance in a bankruptcy court by a foreign representative in connection with a petition or request under section 303 or 305 of this title does not submit such foreign representative to the jurisdiction of any court in the United States for any other purpose, but the bankruptcy court may condition any order under section 303 or 305 of this title on compliance by such foreign representative with the orders of such bankruptcy court. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2561; Pub. L. 109-8, title VIII, Sec. 802(d)(5), Apr. 20, 2005, 119 Stat. 146.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 Section 306 permits a foreign representative that is seeking dismissal or suspension under section 305 of an ancillary case or that is appearing in connection with a petition under section 303 or 304 to appear without subjecting himself to the jurisdiction of any other court in the United States, including State courts. The protection is necessary to allow the foreign representative to present his case and the case of the foreign estate, without waiving the normal jurisdictional rules of the foreign country. That is, creditors in this country will still have to seek redress against the foreign estate according to the host country's jurisdictional rules. Any other result would permit local creditors to obtain unfair advantage by filing an involuntary case, thus requiring the foreign representative to appear, and then obtaining local jurisdiction over the representative in connection with his appearance in this country. That kind of bankruptcy law would legalize an ambush technique that has frequently been rejected by the common law in other contexts. However, the bankruptcy court is permitted under section 306 to condition any relief under section 303, 304, or 305 on the compliance by the foreign representative with the orders of the bankruptcy court. The last provision is not carte blanche to the bankruptcy court to require the foreign representative to submit to jurisdiction in other courts contrary to the general policy of the section. It is designed to enable the bankruptcy court to enforce its own orders that are necessary to the appropriate relief granted under section 303, 304, or 305. AMENDMENTS 2005 - Pub. L. 109-8 struck out ", 304," after "section 303" in two places. EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 307 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 307. United States trustee -STATUTE- The United States trustee may raise and may appear and be heard on any issue in any case or proceeding under this title but may not file a plan pursuant to section 1121(c) of this title. -SOURCE- (Added Pub. L. 99-554, title II, Sec. 205(a), Oct. 27, 1986, 100 Stat. 3098.) -MISC1- EFFECTIVE DATE Effective date and applicability of section dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99- 554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. STANDING AND AUTHORITY OF BANKRUPTCY ADMINISTRATOR Pub. L. 101-650, title III, Sec. 317(b), Dec. 1, 1990, 104 Stat. 5115, provided that: "A bankruptcy administrator may raise and may appear and be heard on any issue in any case under title 11, United States Code, but may not file a plan pursuant to section 1121(c) of such title." -End- -CITE- 11 USC Sec. 308 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER I - COMMENCEMENT OF A CASE -HEAD- Sec. 308. Debtor reporting requirements -STATUTE- (a) For purposes of this section, the term "profitability" means, with respect to a debtor, the amount of money that the debtor has earned or lost during current and recent fiscal periods. (b) A small business debtor shall file periodic financial and other reports containing information including - (1) the debtor's profitability; (2) reasonable approximations of the debtor's projected cash receipts and cash disbursements over a reasonable period; (3) comparisons of actual cash receipts and disbursements with projections in prior reports; (4)(A) whether the debtor is - (i) in compliance in all material respects with postpetition requirements imposed by this title and the Federal Rules of Bankruptcy Procedure; and (ii) timely filing tax returns and other required government filings and paying taxes and other administrative expenses when due; (B) if the debtor is not in compliance with the requirements referred to in subparagraph (A)(i) or filing tax returns and other required government filings and making the payments referred to in subparagraph (A)(ii), what the failures are and how, at what cost, and when the debtor intends to remedy such failures; and (C) such other matters as are in the best interests of the debtor and creditors, and in the public interest in fair and efficient procedures under chapter 11 of this title. -SOURCE- (Added Pub. L. 109-8, title IV, Sec. 434(a)(1), Apr. 20, 2005, 119 Stat. 111.) -REFTEXT- REFERENCES IN TEXT The Federal Rules of Bankruptcy Procedure, referred to in subsec. (b)(4)(A)(i), are set out in the Appendix to this title. -MISC1- EFFECTIVE DATE Pub. L. 109-8, title IV, Sec. 434(b), Apr. 20, 2005, 119 Stat. 111, provided that: "The amendments made by subsection (a) [enacting this section] shall take effect 60 days after the date on which rules are prescribed under section 2075 of title 28, United States Code, to establish forms to be used to comply with section 308 of title 11, United States Code, as added by subsection (a)." -End- -CITE- 11 USC SUBCHAPTER II - OFFICERS 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- SUBCHAPTER II - OFFICERS -End- -CITE- 11 USC Sec. 321 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 321. Eligibility to serve as trustee -STATUTE- (a) A person may serve as trustee in a case under this title only if such person is - (1) an individual that is competent to perform the duties of trustee and, in a case under chapter 7, 12, or 13 of this title, resides or has an office in the judicial district within which the case is pending, or in any judicial district adjacent to such district; or (2) a corporation authorized by such corporation's charter or bylaws to act as trustee, and, in a case under chapter 7, 12, or 13 of this title, having an office in at least one of such districts. (b) A person that has served as an examiner in the case may not serve as trustee in the case. (c) The United States trustee for the judicial district in which the case is pending is eligible to serve as trustee in the case if necessary. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2561; Pub. L. 98-353, title III, Sec. 428, July 10, 1984, 98 Stat. 369; Pub. L. 99-554, title II, Secs. 206, 257(c), Oct. 27, 1986, 100 Stat. 3098, 3114.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 321 indicates that an examiner may not serve as a trustee in the case. SENATE REPORT NO. 95-989 Section 321 is adapted from current Bankruptcy Act Sec. 45 [section 73 of former title 11] and Bankruptcy Rule 209. Subsection (a) specifies that an individual may serve as trustee in a bankruptcy case only if he is competent to perform the duties of trustee and resides or has an office in the judicial district within which the case is pending, or in an adjacent judicial district. A corporation must be authorized by its charter or bylaws to act as trustee, and, for chapter 7 or 13 cases, must have an office in any of the above mentioned judicial districts. AMENDMENTS 1986 - Subsec. (a). Pub. L. 99-554, Sec. 257(c), inserted reference to chapter 12 in two places. Subsec. (c). Pub. L. 99-554, Sec. 206, added subsec. (c). 1984 - Subsec. (b). Pub. L. 98-353 substituted "the case" for "a case" after "an examiner in". EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by section 206 of Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 257 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 322 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 322. Qualification of trustee -STATUTE- (a) Except as provided in subsection (b)(1), a person selected under section 701, 702, 703, 1104, 1163, 1202, or 1302 of this title to serve as trustee in a case under this title qualifies if before five days after such selection, and before beginning official duties, such person has filed with the court a bond in favor of the United States conditioned on the faithful performance of such official duties. (b)(1) The United States trustee qualifies wherever such trustee serves as trustee in a case under this title. (2) The United States trustee shall determine - (A) the amount of a bond required to be filed under subsection (a) of this section; and (B) the sufficiency of the surety on such bond. (c) A trustee is not liable personally or on such trustee's bond in favor of the United States for any penalty or forfeiture incurred by the debtor. (d) A proceeding on a trustee's bond may not be commenced after two years after the date on which such trustee was discharged. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2562; Pub. L. 98-353, title III, Sec. 429, July 10, 1984, 98 Stat. 369; Pub. L. 99-554, title II, Secs. 207, 257(d), Oct. 27, 1986, 100 Stat. 3098, 3114; Pub. L. 103-394, title V, Sec. 501(d)(3), Oct. 22, 1994, 108 Stat. 4143.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 322(a) is modified to include a trustee serving in a railroad reorganization under subchapter IV of chapter 11. SENATE REPORT NO. 95-989 A trustee qualifies in a case by filing, within five days after selection, a bond in favor of the United States, conditioned on the faithful performance of his official duties. This section is derived from the Bankruptcy Act section 50b [section 78(b) of former title 11]. The court is required to determine the amount of the bond and the sufficiency of the surety on the bond. Subsection (c), derived from Bankruptcy Act section 50i [section 78(i) of former title 11], relieves the trustee from personal liability and from liability on his bond for any penalty or forfeiture incurred by the debtor. Subsection (d), derived from section 50m [section 78(m) of former title 11], fixes a two-year statute of limitations on any action on a trustee's bond. Finally, subsection (e) dispenses with the bonding requirement for the United States trustee. AMENDMENTS 1994 - Subsec. (a). Pub. L. 103-394 substituted "1202, or 1302" for "1302, or 1202". 1986 - Subsec. (a). Pub. L. 99-554, Sec. 257(d), inserted reference to section 1202 of this title. Pub. L. 99-554, Sec. 207(1), substituted "Except as provided in subsection (b)(1), a person" for "A person". Subsec. (b). Pub. L. 99-554, Sec. 207(2), amended subsec. (b) generally, adding par. (1), designating existing provisions as par. (2), substituting "The United States trustee" for "The court", "(A) the amount" for "(1) the amount", and "(B) the sufficiency" for "(2) the sufficiency". 1984 - Subsec. (b)(1). Pub. L. 98-353 inserted "required to be". EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by section 207 of Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 257 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 323 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 323. Role and capacity of trustee -STATUTE- (a) The trustee in a case under this title is the representative of the estate. (b) The trustee in a case under this title has capacity to sue and be sued. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2562.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 Subsection (a) of this section makes the trustee the representative of the estate. Subsection (b) grants the trustee the capacity to sue and to be sued. If the debtor remains in possession in a chapter 11 case, section 1107 gives the debtor in possession these rights of the trustee: the debtor in possession becomes the representative of the estate, and may sue and be sued. The same applies in a chapter 13 case. -End- -CITE- 11 USC Sec. 324 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 324. Removal of trustee or examiner -STATUTE- (a) The court, after notice and a hearing, may remove a trustee, other than the United States trustee, or an examiner, for cause. (b) Whenever the court removes a trustee or examiner under subsection (a) in a case under this title, such trustee or examiner shall thereby be removed in all other cases under this title in which such trustee or examiner is then serving unless the court orders otherwise. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2562; Pub. L. 99-554, title II, Sec. 208, Oct. 27, 1986, 100 Stat. 3098.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 This section permits the court, after notice and a hearing, to remove a trustee for cause. AMENDMENTS 1986 - Pub. L. 99-554 amended section generally, designating existing provisions as subsec. (a), substituting "a trustee, other than the United States trustee, or an examiner" for "a trustee or an examiner", and adding subsec. (b). EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. -End- -CITE- 11 USC Sec. 325 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 325. Effect of vacancy -STATUTE- A vacancy in the office of trustee during a case does not abate any pending action or proceeding, and the successor trustee shall be substituted as a party in such action or proceeding. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2562.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 Section 325, derived from Bankruptcy Act section 46 [section 74 of former title 11] and Bankruptcy Rule 221(b), specifies that a vacancy in the office of trustee during a case does not abate any pending action or proceeding. The successor trustee, when selected and qualified, is substituted as a party in any pending action or proceeding. -End- -CITE- 11 USC Sec. 326 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 326. Limitation on compensation of trustee -STATUTE- (a) In a case under chapter 7 or 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee's services, payable after the trustee renders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims. (b) In a case under chapter 12 or 13 of this title, the court may not allow compensation for services or reimbursement of expenses of the United States trustee or of a standing trustee appointed under section 586(b) of title 28, but may allow reasonable compensation under section 330 of this title of a trustee appointed under section 1202(a) or 1302(a) of this title for the trustee's services, payable after the trustee renders such services, not to exceed five percent upon all payments under the plan. (c) If more than one person serves as trustee in the case, the aggregate compensation of such persons for such service may not exceed the maximum compensation prescribed for a single trustee by subsection (a) or (b) of this section, as the case may be. (d) The court may deny allowance of compensation for services or reimbursement of expenses of the trustee if the trustee failed to make diligent inquiry into facts that would permit denial of allowance under section 328(c) of this title or, with knowledge of such facts, employed a professional person under section 327 of this title. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2562; Pub. L. 98-353, title III, Sec. 430(a), (b), July 10, 1984, 98 Stat. 369; Pub. L. 99-554, title II, Sec. 209, Oct. 27, 1986, 100 Stat. 3098; Pub. L. 103-394, title I, Sec. 107, Oct. 22, 1994, 108 Stat. 4111.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 326(a) of the House amendment modifies a provision as contained in H.R. 8200 as passed by the House. The percentage limitation on the fees of a trustee contained in the House bill is retained, but no additional percentage is specified for cases in which a trustee operates the business of the debtor. Section 326(b) of the Senate amendment is deleted as an unnecessary restatement of the limitation contained in section 326(a) as modified. The provision contained in section 326(a) of the Senate amendment authorizing a trustee to receive a maximum fee of $150 regardless of the availability of assets in the estate is deleted. It will not be necessary in view of the increase in section 326(a) and the doubling of the minimum fee as provided in section 330(b). Section 326(b) of the House amendment derives from section 326(c) of H.R. 8200 as passed by the House. It is a conforming amendment to indicate a change with respect to the selection of a trustee in a chapter 13 case under section 1302(a) of title 11. SENATE REPORT NO. 95-989 This section is derived in part from section 48c of the Bankruptcy Act [section 76(c) of former title 11]. It must be emphasized that this section does not authorize compensation of trustees. This section simply fixes the maximum compensation of a trustee. Proposed 11 U.S.C. 330 authorizes and fixes the standard of compensation. Under section 48c of current law, the maximum limits have tended to become minimums in many cases. This section is not intended to be so interpreted. The limits in this section, together with the limitations found in section 330, are to be applied as outer limits, and not as grants or entitlements to the maximum fees specified. The maximum fee schedule is derived from section 48c(1) of the present act [section 76(c)(1) of former title 11], but with a change relating to the bases on which the percentage maxima are computed. The maximum fee schedule is based on decreasing percentages of increasing amounts. The amounts are the amounts of money distributed by the trustee to parties in interest, excluding the debtor, but including secured creditors. These amounts were last amended in 1952. Since then, the cost of living has approximately doubled. Thus, the bases were doubled. It should be noted that the bases on which the maximum fee is computed includes moneys turned over to secured creditors, to cover the situation where the trustee liquidates property subject to a lien and distributes the proceeds. It does not cover cases in which the trustee simply turns over the property to the secured creditor, nor where the trustee abandons the property and the secured creditor is permitted to foreclose. The provision is also subject to the rights of the secured creditor generally under proposed section 506, especially 506(c). The $150 discretionary fee provision of current law is retained. Subsection (b) of this section entitles an operating trustee to a reasonable fee, without any limitation based on the maximum provided for a liquidating trustee as in current law, Bankruptcy Act Sec. 48c(2) [section 76(c)(2) of former title 11]. Subsection (c) [enacted as (b)] permits a maximum fee of five percent on all payments to creditors under a chapter 13 plan to the trustee appointed in the case. Subsection (d) [enacted as (c)] provides a limitation not found in current law. Even if more than one trustee serves in the case, the maximum fee payable to all trustees does not change. For example, if an interim trustee is appointed and an elected trustee replaces him, the combined total of the fees payable to the interim trustee and the permanent trustee may not exceed the amount specified in this section. Under current law, very often a receiver receives a full fee and a subsequent trustee also receives a full fee. The resultant "double-dipping", especially in cases in which the receiver and the trustee are the same individual, is detrimental to the interests of creditors, by needlessly increasing the cost of administering bankruptcy estates. Subsection (e) [enacted as (d)] permits the court to deny compensation to a trustee if the trustee has been derelict in his duty by employing counsel, who is not disinterested. AMENDMENTS 1994 - Subsec. (a). Pub. L. 103-394 substituted "25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000" for "fifteen percent on the first $1,000 or less, six percent on any amount in excess of $1,000 but not in excess of $3,000, and three percent on any amount in excess of $3,000". 1986 - Subsec. (b). Pub. L. 99-554 amended subsec. (b) generally, substituting "under chapter 12 or 13 of this title" for "under chapter 13 of this title", "expenses of the United States trustee or of a standing trustee appointed under section 586(b) of title 28" for "expenses of a standing trustee appointed under section 1302(d) of this title", and "under section 1202(a) or 1302(a) of this title" for "under section 1302(a) of this title". 1984 - Subsec. (a). Pub. L. 98-353, Sec. 430(a), substituted "and three percent on any amount in excess of $3000" for "three percent on any amount in excess of $3,000 but not in excess of $20,000, two percent on any amount in excess of $20,000 but not in excess of $50,000, and one percent on any amount in excess of $50,000". Subsec. (d). Pub. L. 98-353, Sec. 430(b), amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows: "The court may deny allowance of compensation for services and reimbursement of expenses of the trustee if the trustee - "(1) failed to make diligent inquiry into facts that would permit denial of allowance under section 328(c) of this title; or "(2) with knowledge of such facts, employed a professional person under section 327 of this title." EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. REFERENCES IN SUBSECTION (B) TEMPORARILY DEEMED TO INCLUDE ADDITIONAL REFERENCES Until the amendments made by subtitle A (Secs. 201 to 231) of title II of Pub. L. 99-554 become effective in a district and apply to a case, for purposes of such case any reference in subsec. (b) of this section - (1) to chapter 13 of this title is deemed to be a reference to chapter 12 or 13 of this title, (2) to section 1302(d) of this title is deemed to be a reference to section 1302(d) of this title or section 586(b) of Title 28, Judiciary and Judicial Procedure, and (3) to section 1302(a) of this title is deemed to be a reference to section 1202(a) or 1302(a) of this title, see section 302(c)(3)(A), (d), (e) of Pub. L. 99-554, set out as an Effective Date note under section 581 of Title 28. -End- -CITE- 11 USC Sec. 327 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 327. Employment of professional persons -STATUTE- (a) Except as otherwise provided in this section, the trustee, with the court's approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this title. (b) If the trustee is authorized to operate the business of the debtor under section 721, 1202, or 1108 of this title, and if the debtor has regularly employed attorneys, accountants, or other professional persons on salary, the trustee may retain or replace such professional persons if necessary in the operation of such business. (c) In a case under chapter 7, 12, or 11 of this title, a person is not disqualified for employment under this section solely because of such person's employment by or representation of a creditor, unless there is objection by another creditor or the United States trustee, in which case the court shall disapprove such employment if there is an actual conflict of interest. (d) The court may authorize the trustee to act as attorney or accountant for the estate if such authorization is in the best interest of the estate. (e) The trustee, with the court's approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to the debtor or to the estate with respect to the matter on which such attorney is to be employed. (f) The trustee may not employ a person that has served as an examiner in the case. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2563; Pub. L. 98-353, title III, Sec. 430(c), July 10, 1984, 98 Stat. 370; Pub. L. 99-554, title II, Secs. 210, 257(e), Oct. 27, 1986, 100 Stat. 3099, 3114.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 327(a) of the House amendment contains a technical amendment indicating that attorneys, and perhaps other officers enumerated therein, represent, rather than assist, the trustee in carrying out the trustee's duties. Section 327(c) represents a compromise between H.R. 8200 as passed by the House and the Senate amendment. The provision states that former representation of a creditor, whether secured or unsecured, will not automatically disqualify a person from being employed by a trustee, but if such person is employed by the trustee, the person may no longer represent the creditor in connection with the case. Section 327(f) prevents an examiner from being employed by the trustee. SENATE REPORT NO. 95-989 This section authorizes the trustee, subject to the court's approval, to employ professional persons, such as attorneys, accountants, appraisers, and auctioneers, to represent or perform services for the estate. The trustee may employ only disinterested persons that do not hold or represent an interest adverse to the estate. Subsection (b) is an exception, and authorizes the trustee to retain or replace professional persons that the debtor has employed if necessary in the operation of the debtor's business. Subsection (c) provides a professional person is not disqualified for employment solely because of the person's prior employment by or representation of a secured or unsecured creditor. Subsection (d) permits the court to authorize the trustee, if qualified to act as his own counsel or accountant. Subsection (e) permits the trustee, subject to the court's approval, to employ for a specified special purpose an attorney that has represented the debtor, if such employment is in the best interest of the estate and if the attorney does not hold or represent an interest adverse to the debtor of the estate with respect to the matter on which he is to be employed. This subsection does not authorize the employment of the debtor's attorney to represent the estate generally or to represent the trustee in the conduct of the bankruptcy case. The subsection will most likely be used when the debtor is involved in complex litigation, and changing attorneys in the middle of the case after the bankruptcy case has commenced would be detrimental to the progress of that other litigation. HOUSE REPORT NO. 95-595 Subsection (c) is an additional exception. The trustee may employ as his counsel a nondisinterested person if the only reason that the attorney is not disinterested is because of his representation of an unsecured creditor. AMENDMENTS 1986 - Subsec. (b). Pub. L. 99-554, Sec. 257(e)(1), which directed the insertion of ", 1202," after "section 721," was executed by making the insertion after "section 721" to reflect the probable intent of Congress. Subsec. (c). Pub. L. 99-554, Sec. 257(e)(2), which directed the insertion of ", 12," after "section 7," was executed by making the insertion after "chapter 7" to reflect the probable intent of Congress. Pub. L. 99-554, Sec. 210, inserted "or the United States trustee" after "another creditor". 1984 - Subsec. (c). Pub. L. 98-353 substituted "In a case under chapter 7 or 11 of this title, a person is not disqualified for employment under this section solely because of such person's employment by or representation of a creditor, unless there is objection by another creditor, in which case the court shall disapprove such employment if there is an actual conflict of interest." for "In a case under chapter 7 or 11 of this title, a person is not disqualified for employment under this section solely because of such person's employment by or representation of a creditor, but may not, while employed by the trustee, represent, in connection with the case, a creditor." EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by section 210 of Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 257 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 328 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 328. Limitation on compensation of professional persons -STATUTE- (a) The trustee, or a committee appointed under section 1102 of this title, with the court's approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions. (b) If the court has authorized a trustee to serve as an attorney or accountant for the estate under section 327(d) of this title, the court may allow compensation for the trustee's services as such attorney or accountant only to the extent that the trustee performed services as attorney or accountant for the estate and not for performance of any of the trustee's duties that are generally performed by a trustee without the assistance of an attorney or accountant for the estate. (c) Except as provided in section 327(c), 327(e), or 1107(b) of this title, the court may deny allowance of compensation for services and reimbursement of expenses of a professional person employed under section 327 or 1103 of this title if, at any time during such professional person's employment under section 327 or 1103 of this title, such professional person is not a disinterested person, or represents or holds an interest adverse to the interest of the estate with respect to the matter on which such professional person is employed. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2563; Pub. L. 98-353, title III, Sec. 431, July 10, 1984, 98 Stat. 370; Pub. L. 109-8, title XII, Sec. 1206, Apr. 20, 2005, 119 Stat. 194.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 328(c) adopts a technical amendment contained in the Senate amendment indicating that an attorney for the debtor in possession is not disqualified for compensation for services and reimbursement of expenses simply because of prior representation of the debtor. SENATE REPORT NO. 95-989 This section, which is parallel to section 326, fixes the maximum compensation allowable to a professional person employed under section 327. It authorizes the trustee, with the court's approval, to employ professional persons on any reasonable terms, including on a retainer, on an hourly or on a contingent fee basis. Subsection (a) further permits the court to allow compensation different from the compensation provided under the trustee's agreement if the prior agreement proves to have been improvident in light of development unanticipatable at the time of the agreement. The court's power includes the power to increase as well as decrease the agreed upon compensation. This provision is permissive, not mandatory, and should not be used by the court if to do so would violate the code of ethics of the professional involved. Subsection (b) limits a trustee that has been authorized to serve as his own counsel to only one fee for each service. The purpose of permitting the trustee to serve as his own counsel is to reduce costs. It is not included to provide the trustee with a bonus by permitting him to receive two fees for the same service or to avoid the maxima fixed in section 326. Thus, this subsection requires the court to differentiate between the trustee's services as trustee, and his services as trustee's counsel, and to fix compensation accordingly. Services that a trustee normally performs for an estate without assistance of counsel are to be compensated under the limits fixed in section 326. Only services that he performs that are normally performed by trustee's counsel may be compensated under the maxima imposed by this section. Subsection (c) permits the court to deny compensation for services and reimbursement of expenses if the professional person is not disinterested or if he represents or holds an interest adverse to the estate on the matter on which he is employed. The subsection provides a penalty for conflicts of interest. AMENDMENTS 2005 - Subsec. (a). Pub. L. 109-8 inserted "on a fixed or percentage fee basis," after "hourly basis,". 1984 - Subsec. (a). Pub. L. 98-353 substituted "not capable of being anticipated" for "unanticipatable". EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 329 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 329. Debtor's transactions with attorneys -STATUTE- (a) Any attorney representing a debtor in a case under this title, or in connection with such a case, whether or not such attorney applies for compensation under this title, shall file with the court a statement of the compensation paid or agreed to be paid, if such payment or agreement was made after one year before the date of the filing of the petition, for services rendered or to be rendered in contemplation of or in connection with the case by such attorney, and the source of such compensation. (b) If such compensation exceeds the reasonable value of any such services, the court may cancel any such agreement, or order the return of any such payment, to the extent excessive, to - (1) the estate, if the property transferred - (A) would have been property of the estate; or (B) was to be paid by or on behalf of the debtor under a plan under chapter 11, 12, or 13 of this title; or (2) the entity that made such payment. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2564; Pub. L. 98-353, title III, Sec. 432, July 10, 1984, 98 Stat. 370; Pub. L. 99-554, title II, Sec. 257(c), Oct. 27, 1986, 100 Stat. 3114.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 This section, derived in large part from current Bankruptcy Act section 60d [section 96(d) of former title 11], requires the debtor's attorney to file with the court a statement of the compensation paid or agreed to be paid to the attorney for services in contemplation of and in connection with the case, and the source of the compensation. Payments to a debtor's attorney provide serious potential for evasion of creditor protection provisions of the bankruptcy laws, and serious potential for overreaching by the debtor's attorney, and should be subject to careful scrutiny. Subsection (b) permits the court to deny compensation to the attorney, to cancel an agreement to pay compensation, or to order the return of compensation paid, if the compensation exceeds the reasonable value of the services provided. The return of payments already made are generally to the trustee for the benefit of the estate. However, if the property would not have come into the estate in any event, the court will order it returned to the entity that made the payment. The Bankruptcy Commission recommended a provision similar to this that would have also permitted an examination of the debtor's transactions with insiders. S. 236, 94th Cong., 1st sess, sec. 4- 311(b) (1975). Its exclusion here is to permit it to be dealt with by the Rules of Bankruptcy Procedure. It is not intended that the provision be deleted entirely, only that the flexibility of the rules is more appropriate for such evidentiary matters. AMENDMENTS 1986 - Subsec. (b)(1)(B). Pub. L. 99-554 inserted reference to chapter 12. 1984 - Subsec. (a). Pub. L. 98-353, Sec. 432(a), substituted "or" for "and" after "in contemplation of". Subsec. (b)(1). Pub. L. 98-353, Sec. 432(b), substituted "estate" for "trustee". EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 330 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 330. Compensation of officers -STATUTE- (a)(1) After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326, 328, and 329, the court may award to a trustee, a consumer privacy ombudsman appointed under section 332, an examiner, an ombudsman appointed under section 333, or a professional person employed under section 327 or 1103 - (A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, ombudsman, professional person, or attorney and by any paraprofessional person employed by any such person; and (B) reimbursement for actual, necessary expenses. (2) The court may, on its own motion or on the motion of the United States Trustee, the United States Trustee for the District or Region, the trustee for the estate, or any other party in interest, award compensation that is less than the amount of compensation that is requested. (3) In determining the amount of reasonable compensation to be awarded to an examiner, trustee under chapter 11, or professional person, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including - (A) the time spent on such services; (B) the rates charged for such services; (C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title; (D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; (E) with respect to a professional person, whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field; and (F) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title. (4)(A) Except as provided in subparagraph (B), the court shall not allow compensation for - (i) unnecessary duplication of services; or (ii) services that were not - (I) reasonably likely to benefit the debtor's estate; or (II) necessary to the administration of the case. (B) In a chapter 12 or chapter 13 case in which the debtor is an individual, the court may allow reasonable compensation to the debtor's attorney for representing the interests of the debtor in connection with the bankruptcy case based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section. (5) The court shall reduce the amount of compensation awarded under this section by the amount of any interim compensation awarded under section 331, and, if the amount of such interim compensation exceeds the amount of compensation awarded under this section, may order the return of the excess to the estate. (6) Any compensation awarded for the preparation of a fee application shall be based on the level and skill reasonably required to prepare the application. (7) In 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. (b)(1) There shall be paid from the filing fee in a case under chapter 7 of this title $45 to the trustee serving in such case, after such trustee's services are rendered. (2) The Judicial Conference of the United States - (A) shall prescribe additional fees of the same kind as prescribed under section 1914(b) of title 28; and (B) may prescribe notice of appearance fees and fees charged against distributions in cases under this title; to pay $15 to trustees serving in cases after such trustees' services are rendered. Beginning 1 year after the date of the enactment of the Bankruptcy Reform Act of 1994, such $15 shall be paid in addition to the amount paid under paragraph (1). (c) Unless the court orders otherwise, in a case under chapter 12 or 13 of this title the compensation paid to the trustee serving in the case shall not be less than $5 per month from any distribution under the plan during the administration of the plan. (d) In a case in which the United States trustee serves as trustee, the compensation of the trustee under this section shall be paid to the clerk of the bankruptcy court and deposited by the clerk into the United States Trustee System Fund established by section 589a of title 28. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2564; Pub. L. 98-353, title III, Secs. 433, 434, July 10, 1984, 98 Stat. 370; Pub. L. 99-554, title II, Secs. 211, 257(f), Oct. 27, 1986, 100 Stat. 3099, 3114; Pub. L. 103-394, title I, Sec. 117, title II, Sec. 224(b), Oct. 22, 1994, 108 Stat. 4119, 4130; Pub. L. 109-8, title II, Sec. 232(b), title IV, Secs. 407, 415, title XI, Sec. 1104(b), Apr. 20, 2005, 119 Stat. 74, 106, 107, 192.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 330(a) contains the standard of compensation adopted in H.R. 8200 as passed by the House rather than the contrary standard contained in the Senate amendment. Attorneys' fees in bankruptcy cases can be quite large and should be closely examined by the court. However bankruptcy legal services are entitled to command the same competency of counsel as other cases. In that light, the policy of this section is to compensate attorneys and other professionals serving in a case under title 11 at the same rate as the attorney or other professional would be compensated for performing comparable services other than in a case under title 11. Contrary language in the Senate report accompanying S. 2266 is rejected, and Massachusetts Mutual Life Insurance Company v. Brock, 405 F.2d 429, 432 (5th Cir. 1968) is overruled. Notions of economy of the estate in fixing fees are outdated and have no place in a bankruptcy code. Section 330(a)(2) of the Senate amendment is deleted although the Securities and Exchange Commission retains a right to file an advisory report under section 1109. Section 330(b) of the Senate amendment is deleted as unnecessary, as the limitations contained therein are covered by section 328(c) of H.R. 8200 as passed by the House and contained in the House amendment. Section 330(c) of the Senate amendment providing for a trustee to receive a fee of $20 for each estate from the filing fee paid to the clerk is retained as section 330(b) of the House amendment. The section will encourage private trustees to serve in cases under title 11 and in pilot districts will place less of a burden on the U.S. trustee to serve in no-asset cases. Section 330(b) of H.R. 8200 as passed by the House is retained by the House amendment as section 330(c) [section 15330]. SENATE REPORT NO. 95-989 Section 330 authorizes the court to award compensation for services and reimbursement of expenses of officers of the estate, and other professionals. The compensation is to be reasonable, for economy in administration is the basic objective. Compensation is to be for actual necessary services, based on the time spent, the nature, the extent and the value of the services rendered, and the cost of comparable services in nonbankruptcy cases. There are the criteria that have been applied by the courts as analytic aids in defining "reasonable" compensation. The reference to "the cost of comparable services" in a nonbankruptcy case is not intended as a change of existing law. In a bankruptcy case fees are not a matter for private agreement. There is inherent a "public interest" that "must be considered in awarding fees," Massachusetts Mutual Life Insurance Co. v. Brock, 405 F.2d 429, 432 (C.A.5, 1968), cert. denied, 395 U.S. 906 (1969). An allowance is the result of a balance struck between moderation in the interest of the estate and its security holders and the need to be "generous enough to encourage" lawyers and others to render the necessary and exacting services that bankruptcy cases often require. In re Yale Express System, Inc., 366 F.Supp. 1376, 1381 (S.D.N.Y. 1973). The rates for similar kinds of services in private employment is one element, among others, in that balance. Compensation in private employment noted in subsection (a) is a point of reference, not a controlling determinant of what shall be allowed in bankruptcy cases. One of the major reforms in 1938, especially for reorganization cases, was centralized control over fees in the bankruptcy courts. See Brown v. Gerdes, 321 U.S. 178, 182-184 (1944); Leiman v. Guttman, 336 U.S. 1, 4-9 (1949). It was intended to guard against a recurrence of "the many sordid chapters" in "the history of fees in corporate reorganizations." Dickinson Industrial Site, Inc. v. Cowan, 309 U.S. 382, 388 (1940). In the years since then the bankruptcy bar has flourished and prospered, and persons of merit and quality have not eschewed public service in bankruptcy cases merely because bankruptcy courts, in the interest of economy in administration, have not allowed them compensation that may be earned in the private economy of business or the professions. There is no reason to believe that, in generations to come, their successors will be less persuaded by the need to serve in the public interest because of stronger allures of private gain elsewhere. Subsection (a) provides for compensation of paraprofessionals in order to reduce the cost of administering bankruptcy cases. Paraprofessionals can be employed to perform duties which do not require the full range of skills of a qualified professional. Some courts have not hesitated to recognize paraprofessional services as compensable under existing law. An explicit provision to that effect is useful and constructive. The last sentence of subsection (a) provides that in the case of a public company - defined in section 1101(3) - the court shall refer, after a hearing, all applications to the Securities and Exchange Commission for a report, which shall be advisory only. In Chapter X cases in which the Commission has appeared, it generally filed reports on fee applications. Usually, courts have accorded the SEC's views substantial weight, as representing the opinion of a disinterested agency skilled and experienced in reorganization affairs. The last sentence intends for the advisory assistance of the Commission to be sought only in case of a public company in reorganization under chapter 11. Subsection (b) reenacts section 249 of Chapter X of the Bankruptcy Act ([former] 11 U.S.C. 649). It is a codification of equitable principles designed to prevent fiduciaries in the case from engaging in the specified transactions since they are in a position to gain inside information or to shape or influence the course of the reorganization. Wolf v. Weinstein, 372 U.S. 633 (1963). The statutory bar of compensation and reimbursement is based on the principle that such transactions involve conflicts of interest. Private gain undoubtedly prompts the purchase or sale of claims or stock interests, while the fiduciary's obligation is to render loyal and disinterested service which his position of trust has imposed upon him. Subsection (b) extends to a trustee, his attorney, committees and their attorneys, or any other persons "acting in the case in a representative or fiduciary capacity." It bars compensation to any of the foregoing, who after assuming to act in such capacity has purchased or sold, directly or indirectly, claims against, or stock in the debtor. The bar is absolute. It makes no difference whether the transaction brought a gain or loss, or neither, and the court is not authorized to approve a purchase or sale, before or after the transaction. The exception is for an acquisition or transfer "otherwise" than by a voluntary purchase or sale, such as an acquisition by bequest. See Otis & Co. v. Insurance Bldg. Corp., 110 F.2d 333, 335 (C.A.1, 1940). Subsection (c) [enacted as (b)] is intended for no asset liquidation cases where minimal compensation for trustees is needed. The sum of $20 will be allowed in each case, which is double the amount provided under current law. HOUSE REPORT NO. 95-595 Section 330 authorizes compensation for services and reimbursement of expenses of officers of the estate. It also prescribes the standards on which the amount of compensation is to be determined. As noted above, the compensation allowable under this section is subject to the maxima set out in sections 326, 328, and 329. The compensation is to be reasonable, for actual necessary services rendered, based on the time, the nature, the extent, and the value of the services rendered, and on the cost of comparable services other than in a case under the bankruptcy code. The effect of the last provision is to overrule In re Beverly Crest Convalescent Hospital, Inc., 548 F.2d 817 (9th Cir. 1976, as amended 1977), which set an arbitrary limit on fees payable based on the amount of a district judge's salary, and other, similar cases that require fees to be determined based on notions of conservation of the estate and economy of administration. If that case were allowed to stand, attorneys that could earn much higher incomes in other fields would leave the bankruptcy arena. Bankruptcy specialists, who enable the system to operate smoothly, efficiently, and expeditiously, would be driven elsewhere, and the bankruptcy field would be occupied by those who could not find other work and those who practice bankruptcy law only occasionally almost as a public service. Bankruptcy fees that are lower than fees in other areas of the legal profession may operate properly when the attorneys appearing in bankruptcy cases do so intermittently, because a low fee in a small segment of a practice can be absorbed by other work. Bankruptcy specialists, however, if required to accept fees in all of their cases that are consistently lower than fees they could receive elsewhere, will not remain in the bankruptcy field. This subsection provides for reimbursement of actual, necessary expenses. It further provides for compensation of paraprofessionals employed by professional persons employed by the estate of the debtor. The provision is included to reduce the cost of administering bankruptcy cases. In nonbankruptcy areas, attorneys are able to charge for a paraprofessional's time on an hourly basis, and not include it in overhead. If a similar practice does not pertain in bankruptcy cases then the attorney will be less inclined to use paraprofessionals even where the work involved could easily be handled by an attorney's assistant, at much lower cost to the estate. This provision is designed to encourage attorneys to use paraprofessional assistance where possible, and to insure that the estate, not the attorney, will bear the cost, to the benefit of both the estate and the attorneys involved. -REFTEXT- REFERENCES IN TEXT The date of the enactment of the Bankruptcy Reform Act of 1994, referred to in subsec. (b)(2), is the date of enactment of Pub. L. 103-394, which was approved Oct. 22, 1994. -MISC2- AMENDMENTS 2005 - Subsec. (a)(1). Pub. L. 109-8, Sec. 1104(b)(1), inserted "an ombudsman appointed under section 333, or" before "a professional person" in introductory provisions. Pub. L. 109-8, Sec. 232(b), inserted "a consumer privacy ombudsman appointed under section 332," before "an examiner" in introductory provisions. Subsec. (a)(1)(A). Pub. L. 109-8, Sec. 1104(b)(2), inserted "ombudsman," before "professional person". Subsec. (a)(3). Pub. L. 109-8, Sec. 407(1), in introductory provisions, substituted "In" for "(A) In" and inserted "to an examiner, trustee under chapter 11, or professional person" after "awarded". Subsec. (a)(3)(E), (F). Pub. L. 109-8, Sec. 415, added subpar. (E) and redesignated former subpar. (E) as (F). Subsec. (a)(7). Pub. L. 109-8, Sec. 407(2), added par. (7). 1994 - Subsec. (a). Pub. L. 103-394, Sec. 224(b), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: "After notice to any parties in interest and to the United States trustee and a hearing, and subject to sections 326, 328, and 329 of this title, the court may award to a trustee, to an examiner, to a professional person employed under section 327 or 1103 of this title, or to the debtor's attorney - "(1) reasonable compensation for actual, necessary services rendered by such trustee, examiner, professional person, or attorney, as the case may be, and by any paraprofessional persons employed by such trustee, professional person, or attorney, as the case may be, based on the nature, the extent, and the value of such services, the time spent on such services, and the cost of comparable services other than in a case under this title; and "(2) reimbursement for actual, necessary expenses." Subsec. (b). Pub. L. 103-394, Sec. 117, designated existing provisions as par. (1) and added par. (2). 1986 - Subsec. (a). Pub. L. 99-554, Sec. 211(1), inserted "to any parties in interest and to the United States trustee" after "notice". Subsec. (c). Pub. L. 99-554, Sec. 257(f), inserted reference to chapter 12. Subsec. (d). Pub. L. 99-554, Sec. 211(2), added subsec. (d). 1984 - Subsec. (a). Pub. L. 98-353, Sec. 433(1), struck out "to any parties in interest and to the United States trustee" after "After notice". Subsec. (a)(1). Pub. L. 98-353, Sec. 433(2), substituted "nature, the extent, and the value of such services, the time spent on such services" for "time, the nature, the extent, and the value of such services". Subsec. (b). Pub. L. 98-353, Sec. 434(a), substituted "$45" for "$20". Subsec. (c). Pub. L. 98-353, Sec. 434(b), added subsec. (c). EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by section 117 of Pub. L. 103-394 effective Oct. 22, 1994, and applicable with respect to cases commenced under this title before, on, and after Oct. 22, 1994, and amendment by section 224(b) of Pub. L. 103-394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by section 211 of Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 257 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out as a note under section 101 of this title. -End- -CITE- 11 USC Sec. 331 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 331. Interim compensation -STATUTE- A trustee, an examiner, a debtor's attorney, or any professional person employed under section 327 or 1103 of this title may apply to the court not more than once every 120 days after an order for relief in a case under this title, or more often if the court permits, for such compensation for services rendered before the date of such an application or reimbursement for expenses incurred before such date as is provided under section 330 of this title. After notice and a hearing, the court may allow and disburse to such applicant such compensation or reimbursement. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2564.) -MISC1- HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95-989 Section 331 permits trustees and professional persons to apply to the court not more than once every 120 days for interim compensation and reimbursement payments. The court may permit more frequent applications if the circumstances warrant, such as in very large cases where the legal work is extensive and merits more frequent payments. The court is authorized to allow and order disbursement to the applicant of compensation and reimbursement that is otherwise allowable under section 330. The only effect of this section is to remove any doubt that officers of the estate may apply for, and the court may approve, compensation and reimbursement during the case, instead of being required to wait until the end of the case, which in some instances, may be years. The practice of interim compensation is followed in some courts today, but has been subject to some question. This section explicitly authorizes it. This section will apply to professionals such as auctioneers and appraisers only if they are not paid on a per job basis. -End- -CITE- 11 USC Sec. 332 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 332. Consumer privacy ombudsman -STATUTE- (a) If a hearing is required under section 363(b)(1)(B), the court shall order the United States trustee to appoint, not later than 5 days before the commencement of the hearing, 1 disinterested person (other than the United States trustee) to serve as the consumer privacy ombudsman in the case and shall require that notice of such hearing be timely given to such ombudsman. (b) The consumer privacy ombudsman may appear and be heard at such hearing and shall provide to the court information to assist the court in its consideration of the facts, circumstances, and conditions of the proposed sale or lease of personally identifiable information under section 363(b)(1)(B). Such information may include presentation of - (1) the debtor's privacy policy; (2) the potential losses or gains of privacy to consumers if such sale or such lease is approved by the court; (3) the potential costs or benefits to consumers if such sale or such lease is approved by the court; and (4) the potential alternatives that would mitigate potential privacy losses or potential costs to consumers. (c) A consumer privacy ombudsman shall not disclose any personally identifiable information obtained by the ombudsman under this title. -SOURCE- (Added Pub. L. 109-8, title II, Sec. 232(a), Apr. 20, 2005, 119 Stat. 73.) -MISC1- EFFECTIVE DATE Section effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as an Effective Date of 2005 Amendment note under section 101 of this title. -End- -CITE- 11 USC Sec. 333 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER II - OFFICERS -HEAD- Sec. 333. Appointment of patient care ombudsman -STATUTE- (a)(1) If the debtor in a case under chapter 7, 9, or 11 is a health care business, the court shall order, not later than 30 days after the commencement of the case, the appointment of an ombudsman to monitor the quality of patient care and to represent the interests of the patients of the health care business unless the court finds that the appointment of such ombudsman is not necessary for the protection of patients under the specific facts of the case. (2)(A) If the court orders the appointment of an ombudsman under paragraph (1), the United States trustee shall appoint 1 disinterested person (other than the United States trustee) to serve as such ombudsman. (B) If the debtor is a health care business that provides long- term care, then the United States trustee may appoint the State Long-Term Care Ombudsman appointed under the Older Americans Act of 1965 for the State in which the case is pending to serve as the ombudsman required by paragraph (1). (C) If the United States trustee does not appoint a State Long- Term Care Ombudsman under subparagraph (B), the court shall notify the State Long-Term Care Ombudsman appointed under the Older Americans Act of 1965 for the State in which the case is pending, of the name and address of the person who is appointed under subparagraph (A). (b) An ombudsman appointed under subsection (a) shall - (1) monitor the quality of patient care provided to patients of the debtor, to the extent necessary under the circumstances, including interviewing patients and physicians; (2) not later than 60 days after the date of appointment, and not less frequently than at 60-day intervals thereafter, report to the court after notice to the parties in interest, at a hearing or in writing, regarding the quality of patient care provided to patients of the debtor; and (3) if such ombudsman determines that the quality of patient care provided to patients of the debtor is declining significantly or is otherwise being materially compromised, file with the court a motion or a written report, with notice to the parties in interest immediately upon making such determination. (c)(1) An ombudsman appointed under subsection (a) shall maintain any information obtained by such ombudsman under this section that relates to patients (including information relating to patient records) as confidential information. Such ombudsman may not review confidential patient records unless the court approves such review in advance and imposes restrictions on such ombudsman to protect the confidentiality of such records. (2) An ombudsman appointed under subsection (a)(2)(B) shall have access to patient records consistent with authority of such ombudsman under the Older Americans Act of 1965 and under non- Federal laws governing the State Long-Term Care Ombudsman program. -SOURCE- (Added Pub. L. 109-8, title XI, Sec. 1104(a)(1), Apr. 20, 2005, 119 Stat. 191.) -REFTEXT- REFERENCES IN TEXT The Older Americans Act of 1965, referred to in subsecs. (a)(2)(B), (C) and (c)(2), is Pub. L. 89-73, July 14, 1965, 79 Stat. 218, as amended, which is classified generally to chapter 35 (Sec. 3001 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 3001 of Title 42 and Tables. -MISC1- EFFECTIVE DATE Section effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as an Effective Date of 2005 Amendment note under section 101 of this title. -End- -CITE- 11 USC SUBCHAPTER III - ADMINISTRATION 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER III - ADMINISTRATION -HEAD- SUBCHAPTER III - ADMINISTRATION -End- -CITE- 11 USC Sec. 341 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER III - ADMINISTRATION -HEAD- Sec. 341. Meetings of creditors and equity security holders -STATUTE- (a) Within a reasonable time after the order for relief in a case under this title, the United States trustee shall convene and preside at a meeting of creditors. (b) The United States trustee may convene a meeting of any equity security holders. (c) The court may not preside at, and may not attend, any meeting under this section including any final meeting of creditors. Notwithstanding any local court rule, provision of a State constitution, any otherwise applicable nonbankruptcy law, or any other requirement that representation at the meeting of creditors under subsection (a) be by an attorney, a creditor holding a consumer debt or any representative of the creditor (which may include an entity or an employee of an entity and may be a representative for more than 1 creditor) shall be permitted to appear at and participate in the meeting of creditors in a case under chapter 7 or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at any meeting of creditors. (d) Prior to the conclusion of the meeting of creditors or equity security holders, the trustee shall orally examine the debtor to ensure that the debtor in a case under chapter 7 of this title is aware of - (1) the potential consequences of seeking a discharge in bankruptcy, including the effects on credit history; (2) the debtor's ability to file a petition under a different chapter of this title; (3) the effect of receiving a discharge of debts under this title; and (4) the effect of reaffirming a debt, including the debtor's knowledge of the provisions of section 524(d) of this title. (e) Notwithstanding subsections (a) and (b), the court, on the request of a party in interest and after notice and a hearing, for cause may order that the United States trustee not convene a meeting of creditors or equity security holders if the debtor has filed a plan as to which the debtor solicited acceptances prior to the commencement of the case. -SOURCE- (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2564; Pub. L. 99-554, title II, Sec. 212, Oct. 27, 1986, 100 Stat. 3099; Pub. L. 103-394, title I, Sec. 115, Oct. 22, 1994, 108 Stat. 4118; Pub. L. 109-8, title IV, Secs. 402, 413, Apr. 20, 2005, 119 Stat. 104, 107.) -MISC1- HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 341(c) of the Senate amendment is deleted and a contrary provision is added indicating that the bankruptcy judge will not preside at or attend the first meeting of creditors or equity security holders but a discharge hearing for all individuals will be held at which the judge will preside. SENATE REPORT NO. 95-989 Section [Subsection] (a) of this section requires that there be a meeting of creditors within a reasonable time after the order for relief in the case. The Bankruptcy Act [former title 11] and the current Rules of Bankruptcy Procedure provide for a meeting of creditors, and specify the time and manner of the meeting, and the business to be conducted. This bill leaves those matters to the rules. Under section 405(d) of the bill, the present rules will continue to govern until new rules are promulgated. Thus, pending the adoption of different rules, the present procedure for the meeting will continue. Subsection (b) authorizes the court to order a meeting of equity security holders in cases where such a meeting would be beneficial or useful, for example, in a chapter 11 reorganization case where it may be necessary for the equity security holders to organize in order to be able to participate in the negotiation of a plan of reorganization. Subsection (c) makes clear that the bankruptcy judge is to preside at the meeting of creditors. AMENDMENTS 2005 - Subsec. (c). Pub. L. 109-8, Sec. 413, inserted at end "Notwithstanding any local court rule, provision of a State constitution, any otherwise applicable nonbankruptcy law, or any other requirement that representation at the meeting of creditors under subsection (a) be by an attorney, a creditor holding a consumer debt or any representative of the creditor (which may include an entity or an employee of an entity and may be a representative for more than 1 creditor) shall be permitted to appear at and participate in the meeting of creditors in a case under chapter 7 or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at any meeting of creditors." Subsec. (e). Pub. L. 109-8, Sec. 402, added subsec. (e). 1994 - Subsec. (d). Pub. L. 103-394 added subsec. (d). 1986 - Subsec. (a). Pub. L. 99-554, Sec. 212(1), substituted "the United States trustee shall convene and preside at a meeting of creditors" for "there shall be a meeting of creditors". Subsec. (b). Pub. L. 99-554, Sec. 212(2), substituted "United States trustee may convene" for "court may order". Subsec. (c). Pub. L. 99-554, Sec. 212(3), inserted "including any final meeting of creditors". EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109-8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. PARTICIPATION BY BANKRUPTCY ADMINISTRATOR AT MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS Section 105 of Pub. L. 103-394 provided that: "(a) Presiding Officer. - A bankruptcy administrator appointed under section 302(d)(3)(I) of the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note; Public Law 99-554; 100 Stat. 3123), as amended by section 317(a) of the Federal Courts Study Committee Implementation Act of 1990 (Public Law 101-650; 104 Stat. 5115), or the bankruptcy administrator's designee may preside at the meeting of creditors convened under section 341(a) of title 11, United States Code. The bankruptcy administrator or the bankruptcy administrator's designee may preside at any meeting of equity security holders convened under section 341(b) of title 11, United States Code. "(b) Examination of the Debtor. - The bankruptcy administrator or the bankruptcy administrator's designee may examine the debtor at the meeting of creditors and may administer the oath required under section 343 of title 11, United States Code." -End- -CITE- 11 USC Sec. 342 01/03/2007 -EXPCITE- TITLE 11 - BANKRUPTCY CHAPTER 3 - CASE ADMINISTRATION SUBCHAPTER III - ADMINISTRATION -HEAD- Sec. 342. Notice -STATUTE- (a) There shall be given such notice as is appropriate, including notice to any holder of a community claim, of an order for relief in a case under this title. (b) Before the commencement of a case under this title by an individual whose debts are primarily consumer debts, the clerk shall give to such individual written notice containing - (1) a brief description of - (A) chapters 7, 11, 12, and 13 and the general purpose, benefits, and costs of proceeding under each of those chapters; and (B) the types of services available from credit counseling agencies; and (2) statements specifying that - (A) a person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a case under this title shall be subject to fine, imprisonment, or both; and (B) all information supplied by a debtor in connection with a case under this title is subject to examination by the Attorney General. (c)(1) If notice is required to be given by the debtor to a creditor under this title, any rule, any applicable law, or any order of the court, such notice shall contain the name, address, and last 4 digits of the taxpayer identification number of the debtor. If the notice concerns an amendment that adds a creditor to the schedules of assets and liab