11 U.S.C. § 324 — Removal of trustee or examiner

Page 53 TITLE 11—BANKRUPTCY § 324 (2) The United States trustee shall deter- mine— (A) the amount of a bond required to be filed under subsection (a) of this section; and (B) the sufficiency of the surety on such bond. (c) A trustee is not liable personally or on such trustee’s bond in favor of the United States for any penalty or forfeiture incurred by the debtor. (d) A proceeding on a trustee’s bond may not be commenced after two years after the date on which such trustee was discharged. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2562; Pub. L. 98–353, title III, § 429, July 10, 1984, 98 Stat. 369; Pub. L. 99–554, title II, §§ 207, 257(d), Oct. 27, 1986, 100 Stat. 3098, 3114; Pub. L. 103–394, title V, § 501(d)(3), Oct. 22, 1994, 108 Stat. 4143; Pub. L. 111–16, § 2(2), May 7, 2009, 123 Stat. 1607; Pub. L. 116–54, § 4(a)(3), Aug. 23, 2019, 133 Stat. 1085.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 322(a) is modified to include a trustee serving in a railroad reorganization under subchapter IV of chapter 11. SENATE REPORT NO. 95–989 A trustee qualifies in a case by filing, within five days after selection, a bond in favor of the United States, conditioned on the faithful performance of his official duties. This section is derived from the Bank- ruptcy Act section 50b [section 78(b) of former title 11]. The court is required to determine the amount of the bond and the sufficiency of the surety on the bond. Subsection (c), derived from Bankruptcy Act section 50i [section 78(i) of former title 11], relieves the trustee from personal liability and from liability on his bond for any penalty or forfeiture incurred by the debtor. Subsection (d), derived from section 50m [section 78(m) of former title 11], fixes a two-year statute of limita- tions on any action on a trustee’s bond. Finally, sub- section (e) dispenses with the bonding requirement for the United States trustee. Editorial Notes AMENDMENTS 2019—Subsec. (a). Pub. L. 116–54 inserted ‘‘1183,’’ after ‘‘1163,’’. 2009—Subsec. (a). Pub. L. 111–16 substituted ‘‘seven days’’ for ‘‘five days’’. 1994—Subsec. (a). Pub. L. 103–394 substituted ‘‘1202, or 1302’’ for ‘‘1302, or 1202’’. 1986—Subsec. (a). Pub. L. 99–554, § 257(d), inserted ref- erence to section 1202 of this title. Pub. L. 99–554, § 207(1), substituted ‘‘Except as pro- vided in subsection (b)(1), a person’’ for ‘‘A person’’. Subsec. (b). Pub. L. 99–554, § 207(2), amended subsec. (b) generally, adding par. (1), designating existing pro- visions as par. (2), substituting ‘‘The United States trustee’’ for ‘‘The court’’, ‘‘(A) the amount’’ for ‘‘(1) the amount’’, and ‘‘(B) the sufficiency’’ for ‘‘(2) the suffi- ciency’’. 1984—Subsec. (b)(1). Pub. L. 98–353 inserted ‘‘required to be’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2019 AMENDMENT Amendment by Pub. L. 116–54 effective 180 days after Aug. 23, 2019, see section 5 of Pub. L. 116–54, set out as a note under section 101 of this title. EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–16 effective Dec. 1, 2009, see section 7 of Pub. L. 111–16, set out as a note under section 109 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by sec- tion 207 of Pub. L. 99–554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. Amendment by section 257 of Pub. L. 99–554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see sec- tion 302(a), (c)(1) of Pub. L. 99–554. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 323. Role and capacity of trustee (a) The trustee in a case under this title is the representative of the estate. (b) The trustee in a case under this title has capacity to sue and be sued. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2562.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Subsection (a) of this section makes the trustee the representative of the estate. Subsection (b) grants the trustee the capacity to sue and to be sued. If the debtor remains in possession in a chapter 11 case, section 1107 gives the debtor in possession these rights of the trust- ee: the debtor in possession becomes the representative of the estate, and may sue and be sued. The same ap- plies in a chapter 13 case. § 324. Removal of trustee or examiner (a) The court, after notice and a hearing, may remove a trustee, other than the United States trustee, or an examiner, for cause. (b) Whenever the court removes a trustee or examiner under subsection (a) in a case under this title, such trustee or examiner shall there- by be removed in all other cases under this title in which such trustee or examiner is then serv- ing unless the court orders otherwise. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2562; Pub. L. 99–554, title II, § 208, Oct. 27, 1986, 100 Stat. 3098.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 This section permits the court, after notice and a hearing, to remove a trustee for cause. Editorial Notes AMENDMENTS 1986—Pub. L. 99–554 amended section generally, desig- nating existing provisions as subsec. (a), substituting ‘‘a trustee, other than the United States trustee, or an examiner’’ for ‘‘a trustee or an examiner’’, and adding subsec. (b). Page 54 TITLE 11—BANKRUPTCY § 325 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99–554 dependent upon the judicial district in- volved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. § 325. Effect of vacancy A vacancy in the office of trustee during a case does not abate any pending action or pro- ceeding, and the successor trustee shall be sub- stituted as a party in such action or proceeding. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2562.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Section 325, derived from Bankruptcy Act section 46 [section 74 of former title 11] and Bankruptcy Rule 221(b), specifies that a vacancy in the office of trustee during a case does not abate any pending action or pro- ceeding. The successor trustee, when selected and qualified, is substituted as a party in any pending ac- tion or proceeding. § 326. Limitation on compensation of trustee (a) In a case under chapter 7 or 11, other than a case under subchapter V of chapter 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee’s services, payable after the trustee ren- ders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and reasonable com- pensation not to exceed 3 percent of such mon- eys in excess of $1,000,000, upon all moneys dis- bursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims. (b) In a case under subchapter V of chapter 11 or chapter 12 or 13 of this title, the court may not allow compensation for services or reim- bursement of expenses of the United States trustee or of a standing trustee appointed under section 586(b) of title 28, but may allow reason- able compensation under section 330 of this title of a trustee appointed under section 1202(a) or 1302(a) of this title for the trustee’s services, payable after the trustee renders such services, not to exceed five percent upon all payments under the plan. (c) If more than one person serves as trustee in the case, the aggregate compensation of such persons for such service may not exceed the maximum compensation prescribed for a single trustee by subsection (a) or (b) of this section, as the case may be. (d) The court may deny allowance of com- pensation for services or reimbursement of ex- penses of the trustee if the trustee failed to make diligent inquiry into facts that would per- mit denial of allowance under section 328(c) of this title or, with knowledge of such facts, em- ployed a professional person under section 327 of this title. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2562; Pub. L. 98–353, title III, § 430(a), (b), July 10, 1984, 98 Stat. 369; Pub. L. 99–554, title II, § 209, Oct. 27, 1986, 100 Stat. 3098; Pub. L. 103–394, title I, § 107, Oct. 22, 1994, 108 Stat. 4111; Pub. L. 116–54, § 4(a)(4), Aug. 23, 2019, 133 Stat. 1085.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 326(a) of the House amendment modifies a provision as contained in H.R. 8200 as passed by the House. The percentage limitation on the fees of a trust- ee contained in the House bill is retained, but no addi- tional percentage is specified for cases in which a trust- ee operates the business of the debtor. Section 326(b) of the Senate amendment is deleted as an unnecessary re- statement of the limitation contained in section 326(a) as modified. The provision contained in section 326(a) of the Senate amendment authorizing a trustee to re- ceive a maximum fee of $150 regardless of the avail- ability of assets in the estate is deleted. It will not be necessary in view of the increase in section 326(a) and the doubling of the minimum fee as provided in section 330(b). Section 326(b) of the House amendment derives from section 326(c) of H.R. 8200 as passed by the House. It is a conforming amendment to indicate a change with re- spect to the selection of a trustee in a chapter 13 case under section 1302(a) of title 11. SENATE REPORT NO. 95–989 This section is derived in part from section 48c of the Bankruptcy Act [section 76(c) of former title 11]. It must be emphasized that this section does not author- ize compensation of trustees. This section simply fixes the maximum compensation of a trustee. Proposed 11 U.S.C. 330 authorizes and fixes the standard of com- pensation. Under section 48c of current law, the max- imum limits have tended to become minimums in many cases. This section is not intended to be so inter- preted. The limits in this section, together with the limitations found in section 330, are to be applied as outer limits, and not as grants or entitlements to the maximum fees specified. The maximum fee schedule is derived from section 48c(1) of the present act [section 76(c)(1) of former title 11], but with a change relating to the bases on which the percentage maxima are computed. The maximum fee schedule is based on decreasing percentages of in- creasing amounts. The amounts are the amounts of money distributed by the trustee to parties in interest, excluding the debtor, but including secured creditors. These amounts were last amended in 1952. Since then, the cost of living has approximately doubled. Thus, the bases were doubled. It should be noted that the bases on which the max- imum fee is computed includes moneys turned over to secured creditors, to cover the situation where the trustee liquidates property subject to a lien and dis- tributes the proceeds. It does not cover cases in which the trustee simply turns over the property to the se- cured creditor, nor where the trustee abandons the property and the secured creditor is permitted to fore- close. The provision is also subject to the rights of the secured creditor generally under proposed section 506, especially 506(c). The $150 discretionary fee provision of current law is retained. Subsection (b) of this section entitles an operating trustee to a reasonable fee, without any limitation based on the maximum provided for a liquidating trust- ee as in current law, Bankruptcy Act § 48c(2) [section 76(c)(2) of former title 11]. Subsection (c) [enacted as (b)] permits a maximum fee of five percent on all payments to creditors under a chapter 13 plan to the trustee appointed in the case. Subsection (d) [enacted as (c)] provides a limitation not found in current law. Even if more than one trustee serves in the case, the maximum fee payable to all trustees does not change. For example, if an interim trustee is appointed and an elected trustee replaces