In re Scoggins

Concurring.

We CONCUR that this opinion demonstrates that there is an immediate need for a local bankruptcy rule requiring that chapter 7 trustees prepare, file, and notice for hearing fee applications supported by time records and a narrative statement of services in the following circumstances:

(1) All requests seeking $10,000 or more;

(2) All cases in which the trustee seeks fees exceeding the amount remaining for unsecured priority and general claims;

(3) All cases involving a “carve out” or “short sale”;

(4) All cases where the trustee operates a business; and

(5) Any case in which the court specifically orders such a fee application.

The rule will be prescribed by separate general order issued pursuant to 28 U.S.C. § 2071 (e) to have immediate effect, with notice and opportunity for comment provided promptly thereafter.

The Clerk will hereafter provide the court with quarterly reports identifying total chapter 7 trustee compensation *228 awards under 11 U.S.C. §§ 330 (a) and 330(b) for each chapter 7 trustee.

OPINION REGARDING CHAPTER 7 TRUSTEE FEES

Bankruptcy trustee compensation has been a puzzle since enactment of 11 U.S.C. § 330 (a)(7) providing that “reasonable” trustee compensation under the “not to exceed” formula of § 326(a) be “treated” as a “commission.” Two chapter 7 trustees now request four “commissions” totaling $121,415.

The first issue is whether other subsections of § 330, including the § 330(a)(2) power to award “less than the amount of compensation that is requested,” retain vitality in view of the § 330(a)(7) “commission” provision. The answer is yes.

The second issue is what constitutes “extraordinary” in the wake of the decision of the Ninth Circuit Bankruptcy Appellate Panel in Appeal of Hopkins, Ch. 7 Trustee 1 (In re Salgado-Nava), 473 B.R. 911 (9th Cir. BAP 2012). The trustees and U.S. trustee equate “commission” with a fixed fee and say that fees may be reduced only in “extraordinary circumstances,” but they do not explain what is “extraordinary.” This decision holds that whether the fee is “unreasonably disproportionate” is important to the analysis of § 330(a)(2) fee reductions under any standard, including “extraordinary” circumstances.

The third issue…