In re McLean Square Associates, GP
| Decision Date | 15 October 1996 |
| Docket Number | Bankruptcy No. 93-14161-AB. |
| Citation | 201 BR 436 |
| Parties | In re McLEAN SQUARE ASSOCIATES, G.P., Debtor. |
| Court | U.S. District Court — Virgin Islands, Bankruptcy Division |
COPYRIGHT MATERIAL OMITTED
Denise A.G. Erickson, Office of the U.S. Trustee, Alexandria, VA, for United States Trustee.
Ann E. Schmitt, Reed Smith Shaw & McClay, Washington, DC, for McLean Square Associates, G.P.
MARTIN V.B. BOSTETTER, Jr., Chief Judge.
Currently before the Court is a dispute between the United States Trustee and the debtor, McLean Square Associates, G.P., as to the interpretation of 28 U.S.C. § 1930(a)(6), § 211 of the Balanced Budget Downpayment Act, I, Pub.L. No. 104-99, 110 Stat. 26, 37-38 (1996) (the "amendment"). This matter arises before the Court on the debtor's objection to the United States Trustee's request for payment of additional quarterly fees. The United States Trustee demands that the debtor pay additional quarterly fees in accordance with the amended statute from the effective date of the amendment until entry of the final decree closing the case. The debtor objects on the grounds that requiring it to pay post-confirmation quarterly fees would be an improper, retroactive application of the amendment. The narrow issue before the Court is whether the 1996 amendment to § 1930(a)(6) requires the debtor to pay additional quarterly fees to the United States Trustee where its plan was confirmed prior to the enactment of the amendment.
After considering the parties' arguments and reviewing the legislative history and the recent case law on the issue, we find that the amendment to 28 U.S.C. § 1930(a)(6) requires the debtor to pay quarterly fees from the effective date of the amendment, January 27, 1996, through the date of entry of the final decree closing the case.
On October 6, 1993, Mclean Square Associates, G.P. ("debtor") filed a voluntary petition for relief under Chapter 11 of the Code: After three years of complex litigation and subsequent settlement negotiations, this Court entered an order confirming the debtor's First Amended Plan of Reorganization (the "plan") on July 17, 1995.1
On February 14, 1996, the U.S. Trustee brought a motion to show cause why a final decree closing the debtor's case should not be entered, or, in the alternative, why this case should not be dismissed or converted to Chapter 7. The U.S. Trustee's motion prompted the debtor to file its Final Report and Motion for Final Decree on March 19, 1996. The matter came for hearing on March 26, 1996 at which time the U.S. Trustee asserted that under the 1996 amendment to 28 U.S.C. § 1930(a)(6), the debtor was responsible for additional quarterly fees until entry of the final decree. On May 9, 1996, the debtor filed its objection to the payment of the requested post-confirmation quarterly fees. The matter was set for hearing on July 23, 1996.
At the July 23rd hearing, the parties argued the issue of payment of post-confirmation quarterly fees under the amendment. Following that hearing, we entered the final decree closing the case specifically excepting any matters currently pending before the Court and took the issue regarding payment of additional quarterly fees under advisement.
On January 26, 1996, Congress passed the Balanced Budget Downpayment Act, I, Pub.L. No. 104-99, Title II, § 211, 110 Stat. 37 28 U.S.C. § 1930(a)(6). Section 1930(a)(6) prescribes the fees payable to the Unites States Trustee, and provides in pertinent part:
In addition to the filing fee paid to the clerk, a quarterly fee shall be paid to the United States trustee, for deposit in the Treasury, in each case under chapter 11 of title 11 for each quarter (including any fraction thereof) until the case is converted or dismissed, whichever occurs first.
28 U.S.C. § 1930(a)(6) (1996) (emphasis added). The effective date of the amended statute is January 27, 1996.
The prior version of Section 1930(a)(6) provided, in pertinent part:
In addition to the filing fee paid to the clerk, a quarterly fee shall be paid to the United States trustee, for deposit in the Treasury, in each case under chapter 11 of title 11 for each quarter (including any fraction thereof) until a plan is confirmed or the case is converted or dismissed, whichever occurs first.
28 U.S.C. § 1930(a)(6) (1995) (emphasis added).
By deleting the phrase "a plan is confirmed or," the amendment now provides that a Chapter 11 debtor's obligation to pay quarterly fees no longer terminates upon confirmation, but continues until a case is converted or dismissed. Under the prior statute, once a plan was confirmed, no further fees were owed to the U.S. Trustee. The dispute before us now is the precise reach of the statute to pending Chapter 11 cases with confirmed plans in effect on the effective date of the amended statute. The U.S. Trustee contends that the amendment clearly requires that quarterly fees be paid in all cases pending on the effective date until a case is converted to Chapter 7, dismissed or closed upon entry of a final decree. The debtor counters that the amendment contains no clear statement that Congress intended the statute to apply to all Chapter 11 cases with confirmed plans on the effective date.
Nothing in either the text or the legislative history of the 1996 amendment states that Congress intended the amendment to be applied retroactively or prospectively. The legislative history of the amendment explains the types of cases to which the amendment applies. See United States v. Ron Pair Enters., Inc., 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). A section of House Conference Report No. 104-378 (the "Conference Report") entitled "United States Trustee System Fund" states, in pertinent part:
In addition, under section 111, the conferees agree to include an extension of post-confirmation quarterly fee payments made under Chapter 11 as proposed in both the House and Senate bills and expect that these fees will apply to all pending Chapter 11 cases with confirmed reorganization plans.
H.R.Conf.Rep. No. 378, 104th Cong., 1st Sess. 82 (1995); 141 Cong.Rec. H13894 (emphasis added).
The Conference Report also includes a section entitled "General Provisions — Department of Justice," and under § 111, states as follows:
The conference agreement includes section 111 as proposed in the House and Senate Bills, which extends the quarterly fee payments for debtors under Chapter 11 of the Bankruptcy Code to include the period from when a reorganization plan is confirmed by the Bankruptcy Court until the case is converted or dismissed. The conferees intend that this fee will apply to both pending and new cases.
H.R.Conf.Rep. No. 378, 104th Cong., 1st Sess. (1995); 141 Cong.Rec. H13899 (emphasis added).
The Conference Report makes it clear that Congress intended the amendment to apply to all Chapter 11 cases including those with confirmed reorganization plans pending at the time of the enactment of the amended statute. In re Foxcroft Square, 198 B.R. 99, 103 (Bankr.E.D.Pa.1996); In re Upton Printing, 197 B.R. 616, 618 (Bankr. E.D.La.1996); but see Precision Autocraft, Inc., 197 B.R. 901, 905 (Bankr.W.D.Wash. 1996); In re Hudson Oil Company, Inc., 200 B.R. 52, 55 (Bankr.D.Kan.1996). Here, the debtor's plan of reorganization was confirmed on July 17, 1995 and the case remained open until entry of the final decree closing the case on July 23, 1996. We conclude that Congress intended the amendment to apply to the debtor in this case.
Next, we turn to the question of whether application of the amendment to the debtor has a retroactive effect. The debtor argues that requiring it to pay post-confirmation quarterly fees amounts to improper, retroactive application of the amended statute. The U.S. Trustee, on the other hand, asserts that any retroactivity problems are resolved by its position that additional fees may only be sought for the period following the statute's enactment. Notwithstanding the U.S. Trustee's position, the debtor maintains that limiting the payment additional fees from the effective date forward still has retroactive effect. The debtor urges that the amendment imposes a new duty and burden on it and modifies the rights of creditors and the debtor under the confirmed plan.
Under the principles annunciated by the Supreme Court in Landgraf v. USI Film Products, the U.S. Trustee's position is correct. The Landgraf court held:
A statute does not operate "retrospectively" merely because it is applied in a case arising from conduct antedating the statute\'s enactment, citation omitted, or upsets expectations based in prior law. Rather, the court must ask whether the new provision attaches new legal consequences to events completed before its enactment.
Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 1499, 128 L.Ed.2d 229 (1994); see also McAndrews v. Fleet Bank of Massachusetts, 989 F.2d 13, 16 (1st Cir.1993) ()
At least three bankruptcy courts addressing this issue have found that the amended statute is not retroactive as applied to debtors whose plans were confirmed prior to the effective date because the new fees apply only for the period after the effective date. See In re Foxcroft, 198 B.R. at 105 ( ); In re Upton Printing, 197 B.R. at 620 (); see...
To continue reading
Request your trial