875. Fee Agreement—18 U.S.C. § 155

The intent of the section is to prevent parties in interest from dividing up the bankruptcy estate outside the control of the bankruptcy court. The term "party in interest" is not defined in either Title 11 or Title 18 but essentially covers anyone involved in a bankruptcy case. This section covers all agreements, whether expressed or implied, to pay fees or compensation from the assets of the bankruptcy estate. The fees or compensation being "fixed" must (1) relate to a bankruptcy case, (2) be paid from the assets of the bankruptcy estate, and (3) be for services related to the bankruptcy estate.

18 U.S.C. § 155 provides:

Whoever, being a party in interest, whether as a debtor, creditor, receiver, trustee or representative of any of them, or attorney for any such party in interest, in any receivership or case under title 11 in any United States court or under its supervision, knowingly and fraudulently enters into an agreement, express or implied, with another such party in interest or attorney for another such party in interest, for the purpose of fixing the fees or other compensation to be paid to any party in interest or to any attorney for any party in interest for services rendered in connection therewith, from the assets of the estate, shall be fined under this title or imprisoned not more than one year, or both.

    A violation of this statute is a Class A misdemeanor. This section prohibits, in connection with a bankruptcy case, fee fixing agreements between parties in interest for services rendered-- but only if the payments are to come from the assets of the bankruptcy estate. Therefore, payments on pre-existing debts, payments by the debtor for services with post-petition earnings and purchases of property from the bankruptcy estate are not covered by this statute.

    Updated September 19, 2018