As debtors and their lenders budget for a bankruptcy filing, parties negotiate over the cost of the “carveout” for professional fees, leading to a discussion over nearly every detail of the case: How long will a sale process take?
As of Jan. 1, 2018, each jointly administered debtor with quarterly disbursements of at least $1,000,000 must pay a fee of 1% of all disbursements, up to $250,000 per quarter. Although this change in the law was only intended to address shortfalls in UST funding, it has taken a little-noticed component of bankruptcy and magnified it into a ticking tax-bomb for unsuspecting debtors and their lenders.

As debtors and their lenders budget for a bankruptcy filing, parties negotiate over the cost of the “carveout” for professional fees, leading to a discussion over nearly every detail of the case: How long will a sale process take?
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