Hammons Hotel Case: Refunds of U.S. Trustee Fee Overpayments
Following amendments to 28 U.S.C. §1930(a)(6) in 2017, debtors in U.S. Trustee districts saw a substantial increase in quarterly fees—rising from a maximum of $30,000 to as high as $250,000 per quarter, based on disbursement size. However, not all districts implemented the increase uniformly, creating unequal treatment of similarly situated debtors across the country.
Case: Office of the U.S. Trustee v. John Q. Hammons Fall 2006, LLC
Decided: June 2024 (U.S. Supreme Court)
Key Issue: Whether debtors are entitled to refunds for excessive quarterly U.S. Trustee fees
Background
Following amendments to 28 U.S.C. §1930(a)(6) in 2017, debtors in U.S. Trustee districts saw a substantial increase in quarterly fees—rising from a maximum of $30,000 to as high as $250,000 per quarter, based on disbursement size. However, not all districts implemented the increase uniformly, creating unequal treatment of similarly situated debtors across the country.
John Q. Hammons Hotels, a hospitality and real estate portfolio operator, filed suit to recover overpaid fees. The argument: uniformity under the U.S. Constitution requires consistent treatment among bankruptcy filers, and the fee increase violated that principle.
The Supreme Court’s Ruling
In a landmark June 2024 ruling, the Supreme Court held that:
Debtors are entitled to refunds for excessive U.S. Trustee fees paid under non-uniform application of the law.
The Court found the fee structure unconstitutional to the extent it imposed disparate burdens depending on filing district. As a result, eligible debtors who paid excess fees between 2018 and 2021 are entitled to refunds—potentially totaling hundreds of millions of dollars across affected cases.
Implications for Bankruptcy Practice
1. Administrative Cost Predictability
The decision brings long-needed clarity and fairness to the U.S. Trustee fee structure, encouraging uniform fee application nationwide.
2. Financial Relief for Reorganized Debtors
Refunds may boost liquidity for companies that have exited bankruptcy but remain in financial recovery. For others, refunds could offset professional fees or plan obligations.
3. Precedent for Challenging Other Uneven Bankruptcy Practices
The ruling could empower parties to challenge non-uniform application of rules, schedules, or court policies that materially affect reorganizations.
Key Figures
$250,000 – Maximum quarterly UST fee after 2017 amendment
2018–2021 – Period during which non-uniform fees were in effect
Hundreds of millions – Estimated total refunds potentially owed nationwide
Strategic Insight from White Knight Restructuring
For companies recently emerged from bankruptcy, the Hammons decision is an opportunity to recover funds and strengthen post-confirmation balance sheets.
White Knight helps:
Analyze past disbursement data and trustee fee payments
Coordinate refund applications and compliance documentation
Leverage returned capital to support ongoing restructuring goals
We also track legal developments that directly affect debtor recovery—because small victories often have big consequences.
The court’s message is clear: equal footing matters. With White Knight, you’ll never leave value on the table.
