Opinion ID: 789697
Heading Depth: 2
Heading Rank: 1

Heading: Pre-Confirmation Fees

Text: 12 The Debtors argue that payments made by Paying Debtors should not be allocated to other Debtors for whom the payments were made for the purpose of the § 1930(a)(6) fees calculation. They assert that disbursement in that subsection means actual payment by cash or check. By this logic, payments made on behalf of, but not directly by, Debtors are irrelevant in determining the disbursements of those non-paying entities. 13 When the meaning of a statute is plain, the sole function of the courts is to enforce it according to its terms. Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917). The language of a statute is plain when it admits of no more than one meaning and in such a case the duty of interpretation does not arise and the rules which are to aid doubtful meanings need no discussion. Id. 14 Section 1930(a)(6) provides that a quarterly fee shall be paid to the United States trustee ... in each case under chapter 11 of title 11 for each quarter ... until the case is converted or dismissed, whichever occurs first. 28 U.S.C. § 1930(a)(6) (emphasis added). It is clear from this language that each Debtor in its respective Chapter 11 case is required to pay its own quarterly fee. 15 As stated previously, the Bankruptcy Court permitted the Debtors to administer their cases jointly and to transfer funds among themselves, allowing the affiliated Debtors to manage centrally their cash flow. For us the practical question is whether the convenience of cash management procedures make disbursements under § 1930(a)(6) mean only the literal payments by a Debtor even when they are made for other Debtors. Put another way, is an amount owed by Debtor A, but paid by Debtor B, attributed as a disbursement for U.S. Trustee quarterly fees to A (which would pay absent the cash management order) or B (which did not owe the amount itself but as an operational convenience was making A's payment)? 16 Disbursement is not defined in the statute. Thus we interpret the word in accordance with its ordinary, contemporary, common meaning. Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979) (citation omitted). Disburse is defined as to expend or to pay out. Websters' Third New International Dictionary 644 (1976). Based on this ordinary meaning, the Ninth Circuit Court of Appeals held that indirect payment of a debtor's expenses — i.e., payments made by an unrelated third party to secured creditors of the debtor — are disbursements of the owing debtor and should be included in calculating its quarterly fees under § 1930(a)(6). St. Angelo v. Victoria Farms, Inc., 38 F.3d 1525, 1533-34 (9th Cir.1994). 17 Other courts concur. See In re Central Copters, Inc., 226 B.R. 447, 449-50 (Bankr.D.Mont.1998) (holding that the sale proceeds of the secured property, which were paid directly from the purchaser to a secured creditor, should be included in the debtor's disbursements for the purpose of the fee calculation under § 1930(a)(6)); In re Flatbush Assocs., 198 B.R. 75, 78 (Bankr.S.D.N.Y.1996) (concluding that the rents paid directly by a debtor's subtenants to an apartment cooperative, which satisfied the cooperative fees the debtor owed to the apartment cooperative, are the debtor's disbursements); In re Meyer, 187 B.R. 650, 653 (Bankr.W.D.Mo.1995) ([D]isbursements subject to quarterly fees pursuant to 28 U.S.C. § 1930(a)(6) are unrelated to who makes the disbursement or to whom the disbursement is made.) (citations omitted); In re Hays Builders, Inc., 144 B.R. 778, 780 (Bankr.W.D.Tenn.1992) (The ordinary, plain meaning of the statutory language requires that all disbursements, whether direct or through a third party, be included in the calculation of fees due the trustee under § 1930(a)(6).). 18 Here, because the Debtors continued their operations after the bankruptcy filings, they incurred various expenses. Ordinarily each Debtor would have paid its respective quarterly fee to the U.S. Trustee based on the amount of expenses it incurred and paid. The intervening cash management procedures do not change the fact that payments of expenses took place for the account of each Debtor even though those payments occurred indirectly. Indeed, when the Bankruptcy Court granted the Debtors' motions for the continued use of each Debtor group's centralized cash management system, it specifically directed the Debtors to maintain records of all inter-company transfers so that each Debtor could account for all receipts and payments on its behalf. 19 In this context, substance trumps form. Payments made on behalf of a debtor, whether made directly or indirectly through centralized disbursing accounts, constitute that particular debtor's disbursements for the purpose of quarterly fees calculations under § 1930(a)(6). Holding otherwise would allow hundreds of affiliated debtors in Chapter 11 cases to avoid paying fees by having one debtor (or a few debtors) control disbursing accounts. See In re Hays Builders, Inc., 144 B.R. at 780 ([If] the debtor must physically draw the disbursement check in order for the disbursements to be subject to the quarterly fee, [it would] creat[e] an opportunity to avoid paying the fees by setting up third party disbursing arrangements....). While the result increases severalfold the quarterly fees the Debtors owe, any remedy is for Congress to fashion and not our Court.