H.R. 3867: Bankruptcy Administration Improvement Act of 2025

This bill is titled the Bankruptcy Administration Improvement Act of 2025. It aims to update and improve the processes related to bankruptcy administration, particularly focusing on the compensation of trustees, the funding of the bankruptcy system, and extending the terms of temporary bankruptcy judges. Below are the major components of the bill:

Compensation of Bankruptcy Trustees

The bill proposes the following changes to the compensation structure for trustees involved in Chapter 7 bankruptcy cases:

• Increase the compensation for chapter 7 bankruptcy trustees from $60 to $120 per case, which reflects the need for increased compensation since the last adjustment in 1994.
• For most chapter 7 cases, trustees currently receive $45 from part of the compensation structure; this will be raised to $105.
• This increase aims to make compensation more proportionate to the services trustees provide, considering inflation and the increased costs of living since 1994.

Funding for the Bankruptcy System

The bill addresses the funding mechanism for the bankruptcy system, which is essential for its self-sustainability without taxpayer support:

• It proposes to increase certain fees that help fund the United States trustee system, ensuring adequate resources for the administration of bankruptcy cases.
• These fee increases will also apply in districts that are currently not part of a United States trustee region.

Preservation of Bankruptcy Judgeships

The bill supports the preservation of current bankruptcy judgeships:

• It aims to extend the terms of temporary offices of bankruptcy judges from 5 years to 10 years to better manage expected increases in both business and consumer bankruptcy cases.

Bankruptcy Fees and Charges

Changes are also proposed for bankruptcy fees and certain financial provisions:

• The existing filing fee structure will remain unchanged, and the bill ensures that it does not impact the authority of district and bankruptcy courts to waive filing fees for low-income individuals.
• Quarterly fees assessed in Chapter 11 cases will also be adjusted, with one amendment raising the fee from 0.8% to 1.1% for certain periods.
• Specific quarterly fee adjustments are set for the fiscal years 2026 through 2031, specifying amounts to be deposited into various treasury funds.

Effective Date of Amendments

The bill's amendments are set to take effect on the October 1 following its enactment. Specific provisions concerning trustee compensation and bankruptcy fees will apply to new cases filed after this date.

Relevant Companies

• COOP (Mr. Cooper Group Inc.): As a mortgage and loan servicer, changes in bankruptcy cases can impact how home loans are managed, especially during foreclosures.
• ATHA (Athira Pharma, Inc.): The pharmaceutical industry, including companies like Athira, may indirectly be affected if regulations change, impacting costs related to compliance and financial operations in bankruptcies.