CHAPTER 3CASE 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
(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,
Historical and Revision Notes
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
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
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
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
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.
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
``(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
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
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
Subsec. (b). Pub. L. 98-353, Sec. 434(a), substituted ``$45'' for
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.