Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 3–CASE ADMINISTRATION

Sub Chapter II –Officers

Sec. 330. Compensation of officers

   (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, an examiner, a professional person 
employed under section 327 or 1103--
        (A) reasonable compensation for actual, necessary services 
    rendered by the trustee, examiner, 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)(A) In determining the amount of reasonable compensation to be 
awarded, 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; and
        (E) 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.
    (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.

(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.)


                      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.

                       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.


                               Amendments

    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 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.

                  Section Referred to in Other Sections

    This section is referred to in sections 326, 331, 503, 1107, 1203 of 
this title; title 28 sections 586, 589a.


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Legal Resource Center: United States Code TITLE 11 Filing Bankruptcy Forms Software