Technical corrections only. The changes between v1 and v2 primarily reflect the bill's procedural status update from "Introduced in Senate" to "Engrossed in Senate," including an attestation of passage. There are no substantive policy changes to the legislative text.
Bankruptcy Administration Improvement Act of 2025
- Sponsor
- Sen. Coons, Christopher A. [D-DE]
- Committees
- Judiciary Committee (primary)
- Last action
- Aug 8, 2025
Bottom line
The bill doubles Chapter 7 trustee compensation, increases Chapter 11 quarterly fees, and extends temporary bankruptcy judgeships, aiming to strengthen the self-funded bankruptcy system without taxpayer cost.
What it actually does
This bill significantly increases the compensation for Chapter 7 bankruptcy trustees from $60 to $120 per case, addressing a rate that has remained unchanged since 1994. To fund this increase and support the United States Trustee System, it adjusts the allocation of Chapter 7 filing fees and raises quarterly fees for Chapter 11 cases. Additionally, the bill extends the terms of temporary bankruptcy judgeships by five years, from five to ten years, to manage existing and anticipated caseloads.
Proponents argue
Proponents argue that the bill is essential for the effective functioning of the bankruptcy system, which is designed to be self-supporting. They highlight that Chapter 7 trustees, who play a vital role in administering cases and returning assets to creditors, have not seen a compensation increase since 1994, leading to a significant real-dollar decrease due to inflation. Increasing their pay to $120 per case is presented as an overdue adjustment that reflects the original intent and current economic realities. Furthermore, extending temporary judgeships is seen as crucial for managing growing caseloads and maintaining judicial efficiency.
Opponents contend
While the bill's stated goals of improving bankruptcy administration and supporting judgeships are generally uncontroversial, potential opponents might raise concerns about the increase in quarterly fees for Chapter 11 cases, arguing it could place an additional burden on businesses undergoing reorganization. Some might also question the long-term sustainability of relying solely on fee increases to fund the system, especially if bankruptcy filings fluctuate. However, the bill explicitly states it does not alter Chapter 7 filing fees or waive fees for indigent individuals, mitigating some common points of opposition.
The bill is relatively short and clearly structured, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Section 3(a)
Increase in Chapter 7 Trustee Base Compensation
This provision amends federal bankruptcy law to increase the fixed compensation paid to trustees who administer Chapter 7 bankruptcy cases. The base fee for each case is raised from $45 to $105, effectively doubling the total fixed compensation per case from $60 (which includes an additional $15 from another subsection) to $120. This change aims to account for inflation and the increased workload since the last adjustment in 1994.
Supporters argue
Supporters argue this increase is long overdue, as trustee compensation has not been adjusted for inflation since 1994, making the current $60 fee inadequate for the complex work involved. They contend that fair compensation is vital for attracting and retaining qualified trustees, ensuring the efficient and effective administration of thousands of bankruptcy cases, and ultimately benefiting creditors by maximizing asset recovery.
Critics contend
No specific opposition is typically raised against increasing compensation for Chapter 7 trustees, given the clear evidence of stagnant wages and increased workload. Any general opposition would likely focus on the overall cost implications for the bankruptcy system rather than the principle of fair compensation for trustees.
Tradeoffs
The primary tradeoff is balancing the need for adequate trustee compensation with the goal of keeping bankruptcy fees affordable for debtors and the system self-sustaining. This increase necessitates adjustments in other fee allocations to maintain fiscal balance.
Section 3(b)
Reallocation of Chapter 7 Filing Fees
This provision reallocates how the remainder of the Chapter 7 filing fee (after trustee compensation) is distributed. It specifies new fixed amounts to be deposited into three separate funds: $63.51 to the special fund of the Treasury (28 U.S.C. 1931), $25.00 to the Deficit Reduction Act of 2005 special fund, and $51.49 to the United States Trustee System Fund. This adjustment ensures that the trustee compensation increase is funded while maintaining support for other components of the bankruptcy system.
Section 4(a)
Increase in Chapter 11 Quarterly Fee Percentage and Duration
This provision amends the calculation of quarterly fees paid in Chapter 11 bankruptcy cases. It extends the period over which these fees are calculated from 5 years to 10 years and increases the percentage rate applied to disbursements from 0.8% to 1.1%. This change is intended to generate additional revenue to support the overall bankruptcy system, including the increased trustee compensation and judgeship extensions.
Section 5
Extension of Temporary Bankruptcy Judgeship Terms
This provision amends existing laws (the Bankruptcy Administration Improvement Act of 2020 and the Bankruptcy Judgeship Act of 2017) to extend the term of several temporary bankruptcy judgeships across various judicial districts. The authorization for these temporary positions is extended from 5 years to 10 years, ensuring that these courts can continue to manage their caseloads without interruption.
Section 4(c)
Allocation of Chapter 11 Quarterly Fees to General Treasury
For fiscal years 2026 through 2031, this provision mandates that $5,400,000 of the fees collected from Chapter 11 quarterly fees (under 28 U.S.C. 1930(a)(6)) shall be deposited into the general fund of the Treasury. The remainder of these fees will be deposited as specified in the United States Trustee System Fund. This diverts a fixed amount of bankruptcy system revenue to the general federal budget.
Sections 3(c)(2) and 4(b)
Adjustment to United States Trustee System Fund Deposit Period
This provision modifies the structure of how certain fees are deposited into the United States Trustee System Fund by striking specific subparagraphs and redesignating others within 28 U.S.C. 589a(f)(1). Crucially, it also extends the period for these deposits, changing all references from "2026" to "2031." This ensures the fund continues to receive designated revenues for an additional five years, supporting the ongoing operations of the U.S. Trustee Program.
After the trustee receives their increased compensation, the remaining portion of the Chapter 7 filing fee is precisely allocated: $63.51 to a Treasury special fund, $25.00 to a Deficit Reduction Act fund, and $51.49 to the United States Trustee System Fund.
Section 3(b)
Why it matters:This is standard legislative practice for detailing financial mechanics within a self-funding system, rather than an attempt to obscure.
Case for: Proponents argue that these precise allocations ensure the continued funding of various essential components of the bankruptcy system and related federal initiatives, maintaining the system's self-sufficiency.
Case against: Critics might argue that such granular, fixed allocations can become rigid over time, potentially requiring future legislative adjustments if the underlying costs or revenue streams change significantly.
Estimated impact: These allocations, combined with the trustee compensation, account for the full Chapter 7 filing fee, ensuring all components of the system receive their designated share.
The percentage rate for quarterly fees in Chapter 11 cases, applied to disbursements, is increased from 0.8% to 1.1%.
Section 4(a)(2)
Why it matters:This is standard legislative practice for adjusting rates within existing fee structures.
Case for: Proponents argue this increase is necessary to generate sufficient revenue to cover the rising costs of administering the bankruptcy system, including increased trustee compensation and judgeship extensions, ensuring its self-sufficiency.
Case against: Opponents might argue that this percentage increase, combined with the extended duration, could place an undue financial burden on businesses attempting to reorganize under Chapter 11, potentially hindering their recovery.
Estimated impact: This change will result in a 37.5% increase in the quarterly fee rate for Chapter 11 cases, generating substantial additional revenue for the bankruptcy system over the extended 10-year period.