S. 1659 — Bankruptcy Administration Improvement Act of 2025

This section declares congressional findings on the self-funding nature of the bankruptcy system (i.e., funded by fees including chapter 7 filing fees, chapter 11 quarterly fees, and others that support courts, judges, U.S. trustees, and chapter 7 trustees); the essential role of chapter 7 trustees in administering cases and returning assets to creditors (e.g., IRS, USDA, SBA, and private entities); and the stagnation of chapter 7 trustee compensation at $60 per case ($45 under 11 U.S.C. §330(b)(1) and $15 under §330(b)(2)) since 1994 (equivalent to over $125 today per CPI estimates) in nearly 90% of cases, with no pay if filing fees are waived. The section further states that the Act increases such compensation to $120 per case, raises certain fees to fund the U.S. Trustee System Fund (including in non-U.S. trustee districts), supports existing judgeships, and leaves chapter 7 filing fees and waiver authority unchanged.

This section (1) increases chapter 7 standing trustee compensation to $105 (from $45) under 11 U.S.C. 330(b)(1) and strikes 11 U.S.C. 330(e); (2) directs deposit of the remainder of fees collected under 28 U.S.C. 1930(a)(1)(A)—after trustee compensation under 11 U.S.C. 330(b)(1)—as $63.51 to the special fund under 28 U.S.C. 1931, $25.00 to the special fund established under section 10101(b) of the Deficit Reduction Act of 2005 (28 U.S.C. 1931 note), and $51.49 to the United States Trustee System Fund; and (3) amends 28 U.S.C. 589a (United States Trustee System Fund) to (A) set deposits at 28.33 percent of fees collected under 28 U.S.C. 1930(a)(1)(B) in subsection (b)(1) and (B) restructure subsection (f)(1) transfer priorities by striking subparagraphs (B) and (C), redesignating former (D) as (B), and changing "Fourth" to "Second" in the new (B).

This section amends the quarterly fee schedule for chapter 11 bankruptcy cases by (1) substituting "10-year" for "5-year" in 28 U.S.C. 1930(a)(6)(B)(i), and (2) increasing from 0.8 to 1.1 in 28 U.S.C. 1930(a)(6)(B)(ii)(II); extends the period for depositing certain bankruptcy fees into the U.S. Trustee System Fund through 2031 (from 2026); and, for FY2026 through 2031, requires $5,400,000 of quarterly fees to be deposited into the general fund of the Treasury (with the remainder deposited into the fund). (The U.S. Trustee System Fund supports operations of the U.S. Trustee Program, which oversees bankruptcy cases.)

This section extends the terms of temporary bankruptcy judgeships (i.e., additional positions authorized to address caseload needs in specific judicial districts) from 5 years to 10 years (1) in multiple districts under the Bankruptcy Administration Improvement Act of 2020 and (2) in one district under the Bankruptcy Judgeship Act of 2017.

This section specifies that amendments made by this Act generally take effect on the first October 1 after enactment, with exceptions for sections 3 and 4. Specifically, (1) section 3 and its amendments on compensation of officers apply to chapter 7 bankruptcy cases commenced on or after such date and to chapter 11, 12, or 13 cases converted to chapter 7; and (2) section 4 and its amendments on bankruptcy fees apply to chapter 11 cases pending on or after such date and to quarterly fees under 28 U.S.C. §1930(a)(6) for disbursements made in calendar quarters beginning on or after such date.