Second Circuit Decides United States Trustee Chapter 11 Fees Violate Constitution's Uniformity Requirements

On May 24, 2021, the United States Court of Appeals for the Second Circuit agreed with the arguments presented by Z&Z Attorneys Eric A. Henzy and Christopher H. Blau, and held that a 2017 law, which imposed dramatically higher fees on Chapter 11 debtors in every state except North Carolina and Alabama, violated the uniformity requirement of the Constitution’s Bankruptcy Clause.

The Second Circuit’s decision (see PDF below) makes it the first appellate court in the country to conclude that the 2017 law is unconstitutional and creates a circuit split with the Fourth Circuit and the Fifth Circuit.  This is an important victory for Z&Z client Clinton Nurseries, who paid hundreds of thousands of dollars in additional fees under the 2017 law during its successful Chapter 11 reorganization that should now be refunded according to the Second Circuit.