Technical corrections only. v4 incorporates publication details such as page numbers, public law identifiers, and legislative history, indicating it is the enrolled bill as published. There are no substantive changes to the statutory language or policy.
Bankruptcy Administration Improvement Act of 2025
- Sponsor
- Sen. Coons, Christopher A. [D-DE]
- Last action
- Feb 6, 2026
Bottom line
The bill modernizes the financial and administrative framework of the federal bankruptcy system by increasing trustee compensation and adjusting fee allocations, aiming for self-sufficiency without increasing filing fees for individual debtors, while also extending crucial judicial resources.
What it actually does
This Act significantly increases the compensation for Chapter 7 bankruptcy trustees, raising their per-case fee from $60 to $120. It also modifies the allocation of bankruptcy fees to ensure adequate funding for the United States Trustee System Fund and other special funds. Additionally, the bill extends the terms of several temporary bankruptcy judgeships across various judicial districts from 5 years to 10 years, addressing ongoing judicial workload concerns.
Proponents argue
Proponents argue that the bill is essential for maintaining a self-supporting bankruptcy system, ensuring fair compensation for Chapter 7 trustees whose pay has not increased since 1994 despite inflation and increased responsibilities. They emphasize that trustees provide vital services, recovering millions for both government and private creditors. The extension of temporary judgeships is also seen as critical for managing existing and anticipated caseloads, preventing backlogs, and ensuring efficient judicial administration.
Opponents contend
No explicit opposition is detailed within the bill's findings. However, potential critics might raise concerns that the increased quarterly fees for Chapter 11 cases could place additional financial burdens on businesses undergoing reorganization, potentially hindering their recovery efforts. Others might question the long-term reliance on temporary judgeships rather than establishing permanent positions to address systemic workload issues.
The bill is relatively short and its core provisions are clearly stated, making it accessible for an informed reader to evaluate within a reasonable timeframe.
Section 3(a)
Increase in Chapter 7 Trustee Compensation
This provision amends Section 330(b)(1) of title 11, United States Code, to increase the base compensation for trustees serving in Chapter 7 bankruptcy cases. The payment from this subsection is raised from $45 to $105 per case. Combined with the existing $15 from subsection 330(b)(2), this effectively doubles the total per-case compensation for Chapter 7 trustees from $60 to $120.
Supporters argue
Supporters argue this increase is long overdue, as trustee compensation has not been adjusted since 1994, failing to keep pace with inflation and the complexity of cases. They contend it is vital to fairly compensate trustees for their essential work in administering cases and recovering assets for creditors, ensuring the continued functioning of the bankruptcy system.
Critics contend
No specific opposition is typically raised against the principle of increasing trustee compensation, given the historical context of stagnant pay. However, some might indirectly oppose if the funding mechanism is perceived as overly burdensome on other parties.
Tradeoffs
The primary tension is balancing the need for fair trustee compensation with the principle of a self-funded bankruptcy system, ensuring that increased costs are allocated equitably without burdening indigent debtors.
Section 3(b) and 3(c)
Adjustment of Bankruptcy Fee Allocations
These sections modify how fees collected under 28 U.S.C. 1930(a)(1)(A) (Chapter 7 filing fees) are distributed. After compensating trustees, the remaining funds are specifically allocated: $63.51 to a special Treasury fund (28 U.S.C. 1931), $25.00 to another special fund (Deficit Reduction Act of 2005), and $51.49 to the United States Trustee System Fund. This changes the previous percentage-based allocation for the U.S. Trustee System Fund to a fixed dollar amount.
Section 4(a) and 4(c)
Modification of Chapter 11 Quarterly Fees and Deposits
This provision amends 28 U.S.C. 1930(a)(6)(B) by extending the period for certain Chapter 11 quarterly fee calculations from 5 years to 10 years and adjusts the percentage rates for these fees (e.g., changing 0.8 to 0.9). Additionally, for fiscal years 2026 through 2031, $5,400,000 of the fees collected under this section will be deposited into the general fund of the Treasury, with the remainder going to the U.S. Trustee System Fund.
Section 5
Extension of Temporary Bankruptcy Judgeships
This section amends the Bankruptcy Administration Improvement Act of 2020 and the Bankruptcy Judgeship Act of 2017 to extend the term of several temporary bankruptcy judgeships in various judicial districts. The extension changes the sunset period for these positions from 5 years to 10 years, allowing these judges to continue serving for an additional five years beyond their previously scheduled expiration.
This section specifies the exact dollar amounts for the deposit of Chapter 7 filing fees into various special funds after trustee compensation: $63.51 to the special fund under 28 U.S.C. 1931, $25.00 to the special fund under the Deficit Reduction Act of 2005, 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, rather than an attempt to obscure. The precise figures are necessary for administrative implementation.
Case for: The specific allocations ensure predictable and stable funding for the various components of the bankruptcy system, contributing to its self-sufficiency and operational effectiveness.
Case against: While necessary for precision, the fixed dollar amounts might not automatically adjust for inflation or changing operational costs over time, potentially requiring future legislative adjustments.
Estimated impact: These allocations redirect a significant portion of Chapter 7 filing fees to specific federal funds and the U.S. Trustee System Fund, impacting their annual revenue by millions of dollars.
Section 4(a)(2) modifies the calculation of quarterly fees for Chapter 11 cases by adjusting the percentage rates (e.g., changing '0.8' to '0.9') and extending the calculation period from 5 to 10 years. Section 4(c) mandates that for fiscal years 2026 through 2031, $5,400,000 of these collected Chapter 11 fees will be deposited into the general fund of the Treasury, with the remainder going to the U.S. Trustee System Fund.
Section 4(a)(2) and 4(c)
Why it matters:The changes to fee percentages and calculation periods are technical adjustments to existing law. The temporary deposit to the general fund is a specific fiscal policy decision, which is clearly stated but might be overlooked as a temporary measure.
Case for: Proponents argue these adjustments ensure the overall financial health of the bankruptcy system and contribute to broader federal revenue needs, particularly as part of a package to increase trustee compensation without burdening Chapter 7 filers.
Case against: Critics might argue that increased Chapter 11 fees could burden businesses in reorganization, and the diversion of funds to the general Treasury reduces resources directly available for the bankruptcy system's administration.
Estimated impact: These changes will increase the financial burden on Chapter 11 debtors and divert $5.4 million annually from bankruptcy fees to the general Treasury for six fiscal years.