Tamm v. UST, No. 11-60072 (9th Cir. 2015)
Annotate this CasePlaintiff was appointed the chapter 7 trustee when Hokulani Square filed for bankruptcy. The trustee moved to auction Hokulani's principal assets and two groups of secured creditors jointly submitted the winning bid at $1.5 million. The secured creditors exercised their right to credit bid under 11 U.S.C. 363(k) and the trustee subsequently petitioned the bankruptcy court for compensation. The UST objected on the ground that including the value of the credit bid was not authorized under section 326(a). The court agreed with its sister circuits and held that section 326(a) does not permit a trustee to collect fees on a credit bid transaction in which the trustee disburses only property, not "moneys," to the creditor. Accordingly, the court affirmed the bankruptcy appellate panel's reversal of the bankruptcy court's award of compensation to the trustee.
Court Description: Bankruptcy. The panel affirmed the Bankruptcy Appellate Panel’s reversal of the bankruptcy court’s award of compensation to a chapter 7 trustee. The trustee’s compensation is calculated based on the value of the bankruptcy estate assets he disburses. In this case, secured creditors made a winning credit bid on real property of the bankruptcy estate, using money the estate owed them, rather than cash. The panel held that 11 U.S.C. § 326(a) does not permit a trustee to collect fees on a credit bid transaction in which the trustee disburses only property, not “moneys,” to the creditor.
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