U.S. Taxpayers To Foot The Bill for Alabama’s and North Carolina’s Bankruptcy Unconstitutionally?! (In re Hammons)

Who is footing the bill? (Photo by Marilyn Swanson)

By: Donald L Swanson

On August 15, 2022, the Tenth Circuit Court of Appeals reinstates its prior In re Hammons opinion, which deals with remedies for unconstitutionally lower quarterly fees charged to bankruptcy debtors in Alabama and North Carolina.[Fn. 1]

Opinion Points

Check out these points from the Hammons opinion:

  • “Though raising fees in Alabama and North Carolina might solve this problem, . . . we lack authority to do that”;
  • “We lack authority over quarterly fees assessed in . . . Alabama or North Carolina, . . . which is why the constitutional infirmity persists and we are having this debate today”;
  • “But Debtors are entitled to relief,” and “[w]hat we can do is ameliorate the harm of unconstitutional treatment”;
  • If debtor has paid the higher fees, debtor “is entitled to a refund of the amount in excess of the fees it would have paid in (North Carolina or Alabama) during the same time period” [translation: U.S. taxpayers are to foot the bill for Alabama’s and North Carolina’s unconstitutionality]; and
  • “This ruling is limited to Debtors in the instant appeal, who have standing to seek this refund.”


Now . . . read those points again and answer these questions:

  1. On how many levels is this entire situation troubling? 
  2. How is this entire situation right and just and equitable . . . on any level?!
  3. Why should U.S. taxpayers be funding the fallout from Alabama’s and North Carolina’s unconstitutionality?
  4. Why is the relief for unconstitutionality limited to one debtor, since many, many debtors are affected the same way by the same unconstitutionality in all other 48 states and in all U.S. Territories?


That’s all I have to say about that.


Footnote 1.  These quotes are from the Tenth Circuit Court of Appeals opinion, John Q. Hammons Fall 2006 LLC v. U.S. Trustee (In re John Q. Hammons Fall 2006 LLC), 15 F.4th 1011 (10th Cir. Oct. 5, 2021).  Thereafter, the Tenth Circuit Court Court of Appeals “recalled its mandate” under such opinion, in light the U.S. Supreme Court’s opinion in Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022), and “ordered the parties to file supplemental briefs regarding the impact of Siegel on this appeal.”  Then, the Tenth Circuit Court of Appeals, on August 15, 2022, ruled as follows: “Upon careful consideration of the parties’ supplemental briefs and the Supreme Court’s Siegel opinion, we reinstate our original opinion.”

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