Case Summary:
The U.S. Trustee (“UST”) filed a motion to include certain payments as “disbursements” subject to UST quarterly fees under 28 U.S.C. § 1930(a)(6). This case involved a unique set of facts. Debtor Cranberry Grower’s Association (“CranGrow”) had the same prepetition and postpetition lender, CoBank. CoBank offered a postpetition revolving line of credit that also “rolled-up” CranGrow’s prepetition debt into postpetition debt through diverting CranGrow’s accounts receivables. The prepetition debt was rolled-up into postpetition debt to the extent of each account receivable diverted through CoBank. Upon receiving an account receivable, CoBank collected interest and fees and immediately returned the remaining funds to CranGrow so CranGrow could pay operating expenses. Unlike other cases finding similar payments to be “disbursements,” the Court found the payments were not disbursements in this case because the payments at issue did not actually settle or repay any of the debt. In addition, there were concerns over the UST imposing a double fee as a result of CranGrow having to draw on its revolver in part to pay UST fees in the first place, since CranGrow often operated at a loss given the seasonal nature of the farming business.
Statute/Rule References:
28 U.S.C. § 1930(a)(6) -- Bankruptcy Fees
Key Terms:
Disbursement
UST Quarterly Fee