Case Receipts Paid to Creditors and Professionals
GGD-94-173: Published: Jul 13, 1994. Publicly Released: Jul 28, 1994.
- Full Report:
Pursuant to a congressional request, GAO provided information on the total amount and distribution of bankruptcy estate receipts in statistical years 1991 and 1992, focusing on payments to bankruptcy professionals, creditors, and debtors.
GAO found that: (1) about 5 percent of the 1.2-million Chapter 7 bankruptcy cases closed in 1991 and 1992 generated some receipts for distribution to professionals and creditors; (2) of the $2 billion in gross receipts, professionals received about 28 percent, creditors received 61 percent, and others, including debtors, received about 11 percent; (3) 12 percent of the cases that generated receipts in excess of $25,000 accounted for 90 percent of the $2 billion in gross receipts; (4) the cases that generated receipts exceeding $500,000 tended to involve businesses rather than consumers; (5) business cases generated the majority of receipts, took longer to close, and returned more money to creditors than consumer cases; (6) the larger asset cases disbursed a smaller percentage of receipts to general unsecured creditors; (7) professional fees accounted for more than one-half of the $1 billion in estimated costs to process, administer, and close all the cases; (8) trustee income totalled about $216 million for all Chapter 7 cases closed in 1991 and 1992; (9) a significant percentage of trustee income was generated from self-referrals for professional services; and (10) in about 79 percent of the asset cases, trustee compensation exceeded 90 percent of the maximum statutory percentage permitted.