CHAPTER 3CASE ADMINISTRATION
Sub Chapter II Officers
Sec. 329. Debtor's transactions with attorneys
(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
(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.
(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.)
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.
1986--Subsec. (b)(1)(B). Pub. L. 99-554 inserted reference to
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''
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.
Section Referred to in Other Sections
This section is referred to in sections 330, 541 of this title.