5 U.S.C. 301; 28 U.S.C. 509, 510, 586.
Order No. 921-80, 45 FR 82631, Dec. 16, 1980,unless otherwise noted.
(a) Each U.S. Trustee is authorized to establish a panel of private trustees(the “panel”) pursuant to 28 U.S.C. 586(a)(1).
(b) Each U.S. Trustee is authorized, with the approval of the Director,Executive Office for United States Trustees (the “Director”) toincrease or decrease the total membership of the panel. In addition, each U.S.Trustee, with the approval of the Director, is authorized to institute a systemof rotation of membership or the like to achieve diversity of experience,geographical distribution or other characteristics among the persons on thepanel.
Each U.S. Trustee is authorized, subject to the approval of the DeputyAttorney General, or his delegate, to appoint and remove one or more standingtrustees to serve in cases under chapters 12 and 13 of title 11, U.S. Code.
(a) To be eligible for appointment to the panel and to retain eligibilitytherefor, an individual must possess the qualifications described in paragraph(b) of this section in addition to any other statutory qualifications. Acorporation or partnership may qualify as an entity for appointment to theprivate panel. However, each person who, in the opinion of the U.S. Trustee orof the Director, performs duties as trustee on behalf of a corporation orpartnership must individually meet the standards described in paragraph (b) ofthis section, except that each U.S. Trustee, with the approval of the Director,shall have the discretion to
(b) The qualifications for membership on the panel are as follows:
(1) Possess integrity and good moral character.
(2) Be physically and mentally able to satisfactorily perform a trustee'sduties.
(3) Be courteous and accessible to all parties with reasonable inquiries orcomments about a case for which such individual is serving as private trustee.
(4) Be free of prejudices against any individual, entity, or group ofindividuals or entities which would interfere with unbiased performance of atrustee's duties.
(5) Not be related by affinity or consanguinity within the degree of firstcousin to any employee of the Executive Office for United States Trustees of theDepartment of Justice, or to any employee of the office of the U.S. Trustee forthe district in which he or she is applying.
(6)(i) Be a member in good standing of the bar of the highest court of astate or of the District of Columbia; or
(ii) Be a certified public accountant; or
(iii) Hold a bachelor's degree from a full four-year course of study (or theequivalent) of an accredited college or university (accredited as described inpart II, section III of Handbook X118 promulgated by the U.S. Office ofPersonnel Management) with a major in a business-related field of study or atleast 20 semester-hours of business-related courses; or hold a master's ordoctoral degree in a business-related field of study from a college oruniversity of the type described above; or
(iv) Be a senior law student or candidate for a master's degree in businessadministration recommended by the relevant law school or business school deanand working under the direct supervision of:
(A) A member of a law school faculty; or
(B) A member of the panel of private trustees; or
(C) A member of a program established by the local bar association to provideclinical experience to students; or
(v) Have equivalent experience as deemed acceptable by the U.S. Trustee.
(7) Be willing to provide reports as required by the U.S. Trustee.
(8) Have submitted an application under oath, in the form prescribed by theDirector, to the U.S. Trustee for the District in which appointment is sought:
(a) As used in this section—
(1) The term
(2) The term
(3) The term
(4) The word
(b) To be eligible for appointment as a standing trustee, an individual musthave the qualifications for membership on a private panel of trustees set forthin §§ 58.3 (b)(1)-(4), (6)-(8). An individual neednot be an attorney to be eligible for appointment as a standing trustee. Acorporation or partnership may be appointed as standing trustee only with theapproval of the Director.
(c) The United States Trustee shall not appoint as a standing trustee anyindividuals who, at the time of appointment, is:
(1) A relative of another standing trustee in the region in which thestanding trustee is to be appointed;
(2) A relative of a standing trustee (in the region in which the standingtrustee is to be appointed), who, within the preceding one-year period, died,resigned, or was removed as a standing trustee from a case;
(3) A relative of a bankruptcy judge or a clerk of the bankruptcy court inthe region in which the standing trustee is to be appointed;
(4) An employee of the Department of Justice within the preceding one-yearperiod; or
(5) A relative of a United States Trustee or an Assistant United StatesTrustee, a relative of an employee in any of the offices of the United StatesTrustee in the region in which the standing trustee is to be appointed, or arelative of an employee in the Executive Office for United States Trustees.
(d) A standing trustee must, at a minimum, adhere to the following fiduciarystandards:
(1)
(ii) A standing trustee shall also not employ a relative of the United StatesTrustee or of an Assistant United States Trustee in the region in which thetrustee has been appointed or a relative of a bankruptcy court judge or of theclerk of the bankruptcy court in the judicial district in which the trustee hasbeen appointed.
(iii)(A) Paragraphs (d)(1) (i) and (ii) of this section shall not apply to aspouse of a standing trustee who was employed by the standing trustee as ofAugust 1, 1995.
(B) For all other relatives employed by a standing trustee as of August 1,1995, paragraphs (d)(1) (i) and (ii) of this section shall be fully implementedby October 1, 1998, unless specifically provided below:
(
(
(
(2)
(ii) A standing trustee shall not, on behalf of the trust, contract orallocate expenses with himself or herself, with a relative, or with any entityin which the standing trustee or a relative of the standing trustee has afinancial or ownership interest if the costs are to be paid as an expense out ofthe fiduciary expense fund.
(iii)(A) The United States Trustee may grant a waiver from compliance withparagraph (d)(2)(ii) of this section for up to three years following theappointment of a standing trustee if the newly-appointed standing trustee candemonstrate in writing that a waiver is necessary and the cost is at or belowmarket.
(B) The United States Trustee may grant a provisional waiver from compliancewith the allocation prohibition contained in paragraph (d)(2)(ii) of thissection if one of the following conditions is present:
(
(
(C) Except as otherwise provided in this paragraph, a standing trustee mayseek a reasonable extension of time from the United States Trustee to complywith paragraph (d)(2)(ii) of this section. To obtain an extension, a standingtrustee must demonstrate by an appraisal or other written evidence, satisfactoryto the United States Trustee, that the expense is necessary and at or belowmarket rate. In no event shall an extension be granted for the use andoccupation of real estate beyond October 1, 2005. For personal property andpersonal service contracts, no extension shall be granted beyond October 1,1998.
(3)
(e) Paragraph (d) of this section is effective July 2, 1997. As to thosestanding trustees who are appointed as of July 2, 1997, paragraph (d) will beapplicable on the first day of their next fiscal year (i.e., October 1, 1997,for chapter 13 trustees and January 1, 1998, for chapter 12 trustees).
The U.S. Trustees shall not discriminate on the basis of race, color,religion, sex, national origin or age in appointments to the private panel oftrustees or of standing trustees and in this regard shall assure equalopportunity for all appointees and applicants for appointment to the privatepanel of trustees or as standing trustee. Each U.S. Trustee shall be guided bythe policies and requirements of Executive Order 11478 of August 8, 1969,relating to equal employment opportunity in the Federal Government, section 717of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000e-16), section15 of the Age Discrimination in Employment Act of 1967, as amended (29 U.S.C.633a), and the regulations of the Office of Personnel Management relating toequal employment opportunity (5 CFR part 713).
(a) A United States Trustee shall notify a panel trustee or a standingtrustee in writing of any decision to suspend or terminate the assignment ofcases to the trustee including, where applicable, any decision not to renew thetrustee's term appointment. The notice shall state the reason(s) for thedecision and should refer to, or be accompanied by copies of, pertinentmaterials upon which the United States Trustee has relied and any priorcommunications in which the United States Trustee has advised the trustee of thepotential action. The notice shall be sent to the office of the trustee byovernight courier, for delivery the next business day. The reasons may include,but are in no way limited to:
(1) Failure to safeguard or to account for estate funds and assets;
(2) Failure to perform duties in a timely and consistently satisfactorymanner;
(3) Failure to comply with the provisions of the Code, the Bankruptcy Rules,and local rules of court;
(4) Failure to cooperate and to comply with orders, instructions and policiesof the court, the bankruptcy clerk or the United States Trustee;
(5) Substandard performance of general duties and case management incomparison to other members of the chapter 7 panel or other standing trustees;
(6) Failure to display proper temperament in dealing with judges, clerks,attorneys, creditors, debtors, the United States Trustee and the general public;
(7) Failure to adequately monitor the work of professionals or othersemployed by the trustee to assist in the administration of cases;
(8) Failure to file timely, accurate reports, including interim reports,final reports, and final accounts;
(9) Failure to meet the eligibility requirements of 11 U.S.C. 321 or thequalifications set forth in 28 CFR 58.3 and 58.4 and in 11 U.S.C. 322;
(10) Failure to attend in person or appropriately conduct the 11 U.S.C.341(a) meeting of creditors;
(11) Action by or pending before a court or state licensing agency whichcalls the trustee's competence, financial responsibility or trustworthiness intoquestion;
(12) Routine inability to accept assigned cases due to conflicts of interestor to the trustee's unwillingness or incapacity to serve;
(13) Change in the composition of the chapter 7 panel pursuant to a systemestablished by the United States Trustee under 28 CFR 58.1;
(14) A determination by the United States Trustee that the interests ofefficient case administration or a decline in the number of cases warrant areduction in the number of panel trustees or standing trustees.
(b) The notice shall advise the trustee that the decision is final andunreviewable unless the trustee requests in writing a review by the Director,Executive Office for United States Trustees, no later than 20 calendar days fromthe date of issuance of the United States Trustee's notice (“request forreview”). In order to be timely, a request for review must be received bythe Office of the Director no later than 20 calendar days from the date of theUnited States Trustee's notice to the trustee.
(c) A decision by a United States Trustee to suspend or terminate theassignment of cases to a trustee shall take effect upon the expiration of atrustee's time to seek review from the Director or, if the trustee timely seekssuch review, upon the issuance of a final written decision by the Director.
(d) Notwithstanding paragraph (c) of this section, a United States Trustee'sdecision to suspend or terminate the assignment of cases to a trustee mayinclude, or may later by supplemented by an interim directive, by which theUnited States trustee may immediately discontinue assigning cases to a trusteeduring the review period. A United States Trustee may issue such an interimdirective if the United States Trustee specifically finds that:
(1) A continued assignment of cases to the trustee places the safety ofestate assets at risk ;
(2) The trustee appears to be ineligible to serve under applicable law, rule,or regulation;
(3) The trustee has engaged in conduct that appears to be dishonest,deceitful, fraudulent, or criminal in nature; or
(4) The trustee appears to have engaged in other gross misconduct that isunbefitting his or her position as trustee or violates the trustee's duties.
(e) If the United States Trustee issues an interim directive, the trustee mayseek a stay of the interim directive from the Director if the trustee has timelyfiled a request for review under paragraph (b) of this section.
(f) The trustee's written request for review shall fully describe why thetrustee disagrees with the United States Trustee's decision, and shall beaccompanied by all documents and materials that the trustee wants the Directorto consider in reviewing the decision. The trustee shall send a copy of therequest for review, and the accompanying documents and materials, to the UnitedStates Trustee by overnight courier, for delivery the next business day. Thetrustee may request that specific documents in the possession of the UnitedStates Trustee be transmitted to the Director for inclusion in the record.
(g) The United States Trustee shall have 15 calendar days from the date ofthe trustee's request for review to submit to the Director a written responseregarding the matters raised in the trustee's request for review. The UnitedStates Trustee shall provide a copy of this response to the trustee. Both copesshall be sent by overnight courier, for delivery the next business day.
(h) The Director may seek additional information from any party in the
(i) Unless the trustee and the United States Trustee agree to a longer periodof time, the Director shall issue a written decision no later than 30 calendardays from the receipt of the United States Trustee's response to the trustee'srequest for review. That decision shall determine whether the United StatesTrustee's decision is supported by the record and the action is an appropriateexercise of the United States Trustee's discretion, and shall adopt, modify orreject the United States Trustee's decision to suspend or terminate theassignment of future cases to the trustee. The Director's decision shallconstitute final agency action.
(j) In reaching a determination, the Director may specify a person to act asa reviewing official. The reviewing official shall not be a person who wasinvolved in the United States Trustee's decision or a Program employee who islocated within the region of the United States Trustee who made the decision.The reviewing official's duties shall be specified by the Director on a case bycase basis, and may include reviewing the record, obtaining additionalinformation from the participants, providing the Director with writtenrecommendations, or such other duties as the Director shall prescribe in aparticular case.
(k) This rule does not authorize a trustee to seek review of any decision toincrease the size of the chapter 7 panel or to appoint additional standingtrustees in the district or region.
(l) A trustee who files a request for review shall bear his or her own costsand expenses, including counsel fees.
(a)
(2) The United States Trustees shall use these Guidelines in all casescommenced on or after October 22, 1994.
(3) The Guidelines are not intended to supersede local rules of court, butshould be read as complementing the procedures set forth in local rules.
(4) Nothing in the Guidelines should be construed:
(i) To limit the United States Trustee's discretion to request additionalinformation necessary for the review of a particular application or type ofapplication or to refer any information provided to the United States Trustee toany investigatory or prosecutorial authority of the United States or a state;
(ii) To limit the United States Trustee's discretion to determine whether tofile comments or objections to applications; or
(iii) To create any private right of action on the part of any personenforceable in litigation with the United States Trustee or the United States.
(5) Recognizing that the final authority to award compensation andreimbursement under section 330 of the Code is vested in the Court, theGuidelines focus on the disclosure of information relevant to a proper awardunder the law. In evaluating fees for professional services, it is relevant toconsider various factors including the following: the time spent; the ratescharged; whether the services were necessary to the administration of, orbeneficial towards the completion of, the case at the time they were rendered;whether services were performed within a reasonable time commensurate with thecomplexity, importance, and nature of the problem, issue, or task addressed; andwhether compensation is reasonable based on the customary compensation chargedby comparably skilled practitioners in non-bankruptcy cases. The Guidelines thusreflect standards and procedures articulated in section 330 of the Code and Rule2016 of the Federal Rules of Bankruptcy Procedure for awarding compensation totrustees and to professionals employed under section 327 or 1103. Applicationsthat contain the information requested in these Guidelines will facilitatereview by the Court, the parties, and the United States Trustee.
(6) Fee applications submitted by trustees are subject to the same standardof review as are applications of other professionals and will be evaluatedaccording to the principles articulated in these Guidelines. Each United StatesTrustee should establish whether and
(b)
(1) Information about the Applicant and the Application. The followinginformation should be provided in every fee application:
(i) Date the bankruptcy petition was filed, date of the order approvingemployment, identity of the party represented, date services commenced, andwhether the applicant is seeking compensation under a provision of theBankruptcy Code other than section 330.
(ii) Terms and conditions of employment and compensation, source ofcompensation, existence and terms controlling use of a retainer, and anybudgetary or other limitations on fees.
(iii) Names and hourly rates of all applicant's professionals andparaprofessionals who billed time, explanation of any changes in hourly ratesfrom those previously charged, and statement of whether the compensation isbased on the customary compensation charged by comparably skilled practitionersin cases other than cases under title 11.
(iv) Whether the application is interim or final, and the dates of previousorders on interim compensation or reimbursement of expenses along with theamounts requested and the amounts allowed or disallowed, amounts of all previouspayments, and amount of any allowed fees and expenses remaining unpaid.
(v) Whether the person on whose behalf the applicant is employed has beengiven the opportunity to review the application and whether that person hasapproved the requested amount.
(vi) When an application is filed less than 120 days after the order forrelief or after a prior application to the Court, the date and terms of theorder allowing leave to file at shortened intervals.
(vii) Time period of the services or expenses covered by the application.
(2) Case Status. The following information should be provided to the extentthat it is known to or can be reasonably ascertained by the applicant:
(i) In a chapter 7 case, a summary of the administration of the caseincluding all moneys received and disbursed in the case, when the case isexpected to close, and, if applicant is seeking an interim award, whether it isfeasible to make an interim distribution to creditors without prejudicing therights of any creditor holding a claim of equal or higher priority.
(ii) In a chapter 11 case, whether a plan and disclosure statement have beenfiled and, if not yet filed, when the plan and disclosure statement are expectedto be filed; whether all quarterly fees have been paid to the United StatesTrustee; and whether all monthly operating reports have been filed.
(iii) In every case, the amount of cash on hand or on deposit, the amount andnature of accrued unpaid administrative expenses, and the amount of unencumberedfunds in the estate.
(iv) Any material changes in the status of the case that occur after thefiling of the fee application should be raised, orally or in writing, at thehearing on the application or, if a hearing is not required, prior to theexpiration of the time period for objection.
(3) Summary Sheet. All applications should contain a summary or cover sheetthat provides a synopsis of the following information:
(i) Total compensation and expenses requested and any amount(s) previouslyrequested;
(ii) Total compensation and expenses previously awarded by the court;
(iii) Name and applicable billing rate for each person who billed time duringthe period, and date of bar admission for each attorney;
(iv) Total hours billed and total amount of billing for each person whobilled time during billing period; and
(v) Computation of blended hourly rate for persons who billed time duringperiod, excluding paralegal or other paraprofessional time.
(4) Project Billing Format. (i) To facilitate effective review of theapplication, all time and service entries should be arranged by projectcategories. The project categories set forth in exhibit A should be used to theextent applicable. A separate project category should be used for administrativematters and, if payment is requested, for fee application preparation.
(ii) The United States Trustee has discretion to determine that the projectbilling format is not necessary in a particular case or in a particular class ofcases. Applicants should be encouraged to consult with the United States Trusteeif there is a question as to the need for project billing in any particularcase.
(iii) Each project category should contain a narrative summary of thefollowing information:
(A) a description of the project, its necessity and benefit to the estate,and the status
(B) identification of each person providing services on the project; and
(C) a statement of the number of hours spent and the amount of compensationrequested for each professional and paraprofessional on the project.
(iv) Time and service entries are to be reported in chronological order underthe appropriate project category.
(v) Time entries should be kept contemporaneously with the services renderedin time periods of tenths of an hour. Services should be noted in detail and notcombined or “lumped” together, with each service showing a separatetime entry; however, tasks performed in a project which total a de minimisamount of time can be combined or lumped together if they do not exceed .5 hourson a daily aggregate. Time entries for telephone calls, letters, and othercommunications should give sufficient detail to identify the parties to and thenature of the communication. Time entries for court hearings and conferencesshould identify the subject of the hearing or conference. If more than oneprofessional from the applicant firm attends a hearing or conference, theapplicant should explain the need for multiple attendees.
(5) Reimbursement for Actual, Necessary Expenses. Any expense for whichreimbursement is sought must be actual and necessary and supported bydocumentation as appropriate. Factors relevant to a determination that theexpense is proper include the following:
(i) Whether the expense is reasonable and economical. For example, firstclass and other luxurious travel mode or accommodations will normally beobjectionable.
(ii) Whether the requested expenses are customarily charged to non-bankruptcyclients of the applicant.
(iii) Whether applicant has provided a detailed itemization of all expensesincluding the date incurred, description of expense (e.g., type of travel, typeof fare, rate, destination), method of computation, and, where relevant, name ofthe person incurring the expense and purpose of the expense. Itemized expensesshould be identified by their nature (e.g., long distance telephone, copy costs,messengers, computer research, airline travel, etc,) and by the month incurred.Unusual items require more detailed explanations and should be allocated, wherepracticable, to specific projects.
(iv) Whether applicant has prorated expenses where appropriate between theestate and other cases (e.g., travel expenses applicable to more than one case)and has adequately explained the basis for any such proration.
(v) Whether expenses incurred by the applicant to third parties are limitedto the actual amounts billed to, or paid by, the applicant on behalf of theestate.
(vi) Whether applicant can demonstrate that the amount requested for expensesincurred in-house reflect the actual cost of such expenses to the applicant. TheUnited States Trustee may establish an objection ceiling for any in-houseexpenses that are routinely incurred and for which the actual cost cannot easilybe determined by most professionals (e.g., photocopies, facsimile charges, andmileage).
(vii) Whether the expenses appear to be in the nature nonreimbursableoverhead. Overhead consists of all continuous administrative or general costsincident to the operation of the applicant's office and not particularlyattributable to an individual client or case. Overhead includes, but is notlimited to, word processing, proofreading, secretarial and other clericalservices, rent, utilities, office equipment and furnishings, insurance, taxes,local telephones and monthly car phone charges, lighting, heating and cooling,and library and publication charges.
(viii) Whether applicant has adhered to allowable rates for expenses as fixedby local rule or order of the Court.
Here is a list of suggested project categories for use in most bankruptcycases. Only one category should be used for a given activity. Professionalsshould make their best effort to be consistent in their use of categories,whether within a particular firm or by different firms working on the same case.It would be appropriate for all professionals to discuss the categories inadvance and agree generally on how activities will be categorized. This list isnot exclusive. The application may contain additional categories as the caserequires. They are generally more applicable to attorneys in chapter 7 andchapter 11, but may be used by all professionals as appropriate.
The following categories are generally more applicable to accountants andfinancial advisors, but may be used by all professionals as appropriate.