In this bankruptcy case, the United States Trustee (“the Trustee”) filed a motion to compel additional payment on the quarterly fees for the third and fourth quarters of 1999 by Cash Cow Services of Florida, LLC (“Cash Cow”), a Chapter 11 debtor. The Bankruptcy Court for the Northern District of Florida held that Cash Cow’s consumer loans were “disbursements” for the purposes of 28 U.S.C. § 1930(a)(6) and thus subject to the Trustee’s fees. of Fla., 249 B.R. 33 (Bankr.N.D.Fla.2000). The district court reversed. The Trustee appeals. We reverse and hold that the consumer loans made by Cash Cow were disbursements within the meaning of the statute and thus subject to the Trustee’s fees.

United States Court of Appeals,Eleventh Circuit. IN RE: CASH COW SERVICES OF FLORIDA LLC, Debtor. Cash Cow Services of Florida LLC, Plaintiff-Appellee, v. United States Trustee, Defendant-Appellant. No. 01-11805

Briefly, Cash Cow is a Florida company which operated a chain of stores that provided two types of consumer loans. The first type were “title loans,” which are defined as a “loan of money secured by bailment of a certificate of title to a motor vehicle.” Fla. Stat. § (1)(i) (1999). Such loans are not subject to Florida’s usury law and its eighteen percent per year interest ceiling. Fla. Stat. § (1999). Cash Cow could charge up to twenty-two percent per month. Fla. Stat. § (5)(e) (1999).

The second type of consumer loans were “check cashing” loans. In these transactions, the customer would give Cash Cow a check, receive a lesser amount of cash, and Cash Cow would agree to hold the check for two weeks (“delayed presentment”) when either (a) the customer paid Cash Cow the full amount of the check or (b) Cash Cow cashed the check.

This is a preconfirmation case, no Chapter 11 plan having been confirmed at the time of the decision. 28 U.S.C. § 1930 (1996) provides that parties commencing a case under Chapter 11 are subject to graduated fees for each quarter, based upon the “disbursements” for each quarter, until the case is converted or dismissed. Cash Cow’s operating reports for the third and fourth quarters of 1999 calculated fees of $4,250 (based on disbursements of $152,458) and $8,000 (based on disbursements of $732,502) respectively, but did not include the amounts attributed to the title or check cashing loans. Calculations which included the loans made to customers showed an additional $8,500 (based on recalculated disbursements of $1,820,908) for the third quarter and an additional $48,750 (based on recalculated disbursements of $10,391,325), for a total amount in dispute of $57,250. Of course, the principle of law to be established by this case has ramifications beyond the amounts involved here.

In re Cash Cow Servs

The question is whether the consumer loans made by Cash Cow to its customers were “disbursements” under 28 U.S.C. § 1930(a)(6).

The bankruptcy court, after thoroughly analyzing the current caselaw, held that these consumer loans were “disbursements” subject to the Trustee’s payday loans cash advance for bad credit Franklin TN fees for the following reasons: (1) funds flow from the preconfirmation estate to a customer-bailor, in exchange for an income earning opportunity flowing to the Debtor as bailee; (2) Cash Cow cited no legal precedent that would serve to limit the application of the fee calculation to capital flowing from the preconfirmation bankruptcy estate; and (3) Congress meant “disbursements” to include any and all funds paid out by the debtor (citing In re Pettibone Corp., 244 B.R. 906, 919 (Bankr.N.D.Ill.2000) (internal citations omitted)).

The district court reversed, holding that (1) a “loan” is not a “disbursement” as ordinarily defined; and (2) Congress did not intend the Trustee’s fees to be based, in part, on the gross volume of Cash Cow’s business just because Cash Cow was in the business of lending money.

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