Post-Dismissal Allowance of § 503(b) Fees in Unconfirmed Chapter 13 Cases Under § 1326(a)(2)

Case: Gregory Brian Myers v. Undine C. George
Court: U.S. Court of Appeals for the Eleventh Circuit (Non-Argument Calendar) (Not for Publication)
Date: 2026-08-12
Core Holding: Even after dismissal of an unconfirmed Chapter 13 case, the bankruptcy court may adjudicate and “allow” administrative expenses (including debtor’s counsel fees under § 503(b)(2)/§ 330(a)(4)(B)), and the trustee must pay those allowed expenses from undisbursed plan payments under § 1326(a)(2) before any refund to the debtor.

I. Introduction

This appeal arose from a dismissed Chapter 13 case in which the debtor, Gregory Brian Myers, sought the return of undisbursed plan payments being held by the Chapter 13 trustee. The opposing party, Undine C. George (Myers’s former Chapter 13 counsel), applied for payment of attorney’s fees and costs as administrative expenses. The bankruptcy court dismissed Myers’s petition with prejudice as a bad-faith filing and imposed a two-year bar to refiling, yet it reserved jurisdiction to decide timely administrative-expense requests and directed the trustee to pay allowed fees before refunding any remaining funds to Myers.

The central legal issue on appeal was not the reasonableness of the fees, but whether the bankruptcy court had authority—after dismissal and prior to plan confirmation—to allow administrative expenses and have them paid out of undisbursed plan payments, in light of the general dismissal/revesting rule in 11 U.S.C. § 349 and a local Administrative Order (FLMB-2020-7) that set a 14-day post-dismissal deadline for administrative-expense applications.

II. Summary of the Opinion

The Eleventh Circuit affirmed the district court and bankruptcy court. It held:

• The bankruptcy court retained jurisdiction post-dismissal to decide collateral matters such as attorney’s fees, including administrative expenses under § 503(b).
• Nothing in § 1326(a)(2) requires that the administrative-expense claim be “allowed” before dismissal; the statute requires the trustee to return payments after deducting any unpaid claim allowed under § 503(b).
• Section 503(a) contemplates timing flexibility (“timely” filing, or tardy filing permitted for cause), supporting a procedure that allows post-dismissal filing within a short window.
• Administrative Order FLMB-2020-7 was treated as a procedural mechanism implementing § 1326(a)(2), not as an impermissible modification of substantive rights under § 349.
• Section 349(b)(3)’s revesting principle does not directly map onto post-petition plan payments from future earnings; § 1326(a)(2) supplies the specific directive governing the return of those payments.
• The court also denied George’s request for appellate sanctions, concluding Myers’s appeal was not shown to be frivolous under Fed. R. App. P. 38.

III. Analysis

A. Precedents Cited (and Their Role)

1) Standards of review and appellate posture

• In re Cutuli, 13 F.4th 1342 (11th Cir. 2021): Cited for the principle that when a district court affirms a bankruptcy court, the court of appeals independently reviews the bankruptcy court’s legal and factual determinations.
• In re Globe Mfg. Corp., 567 F.3d 1291 (11th Cir. 2009): Cited for the conventional bankruptcy appellate standard—factual findings reviewed for clear error, legal conclusions de novo.

2) The meaning and flexibility of dismissal under § 349

• First Nat'l Bank of Oneida, N.A. v. Brandt, 887 F.3d 1255 (11th Cir. 2018): Used to characterize § 349(b)’s purpose: returning parties “as far as practicable” to prepetition financial positions.
• In re Morris, 950 F.2d 1531 (11th Cir. 1992): Critical to the panel’s response to Myers’s § 349 arguments. It emphasizes § 349’s carve-out—“for cause, order otherwise”—and confirms the bankruptcy court’s power to alter the normal effects of dismissal when cause exists.

3) Post-dismissal jurisdiction over collateral matters

• Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990): The foundational authority for continuing jurisdiction over collateral issues (fees, costs, sanctions) after termination of the principal action. The panel analogized administrative-fee determinations to those collateral matters.
• Law Sols. Of Chicago LLC v. Corbett, 971 F.3d 1299 (11th Cir. 2020): Reinforced the concept in the bankruptcy context, holding that a bankruptcy court may retain jurisdiction to impose sanctions after underlying cases are closed—supporting the broader proposition that closure/dismissal does not automatically extinguish power over ancillary matters.

4) Local rules/procedures versus substantive rights

• Villano v. City of Boynton Beach, 254 F.3d 1302 (11th Cir. 2001): Cited for the limit that a local rule cannot “eviscerate a statutory right.”
• Brown v. Crawford Cty., Ga., 960 F2d 1002 (11th Cir. 1992): Cited similarly—local procedures cannot circumvent or contradict substantive rights.
• Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010): Used for the substantive/procedural distinction—rules that regulate process (without altering rights, remedies, or rules of decision) are generally acceptable. The panel positioned Administrative Order FLMB-2020-7 as procedural implementation of § 1326(a)(2), not a substantive rewrite.

5) Nature of Chapter 13 plan payments (post-petition earnings)

• Harris v. Viegelahn, 575 U.S. 510 (2015): Cited for the description that Chapter 13 plan payments are usually made from a debtor’s “future earnings or other future income,” supporting the panel’s view that § 349(b)(3)’s “revest” framing does not directly address these post-petition funds.

6) Prudence in deferring fee determinations to avoid delaying case disposition

• In re Sweports, Ltd., 777 F.3d 364 (7th Cir. 2015): Cited approvingly for the practical notion that it can be “sensible” to dismiss a bankruptcy case and resolve attorneys’ fees later, avoiding delay in dismissal.

7) Authorities Myers relied on (distinguished as unpersuasive or inapposite)

• In re Taiwo, 20-bk-00157, 2021 WL 850533 (Bankr. D.C. Mar. 4, 2021): The panel discounted it as unpublished, out-of-circuit, and providing no analysis for the asserted timing limitation.
• In re James, 6:16-bk-10742586 (Bankr. W.D. Ark. Jan. 9, 2017): Treated the same way as In re Taiwo.
• In re Bateson, 551 B.R. 807 (Bankr. E.D. Mich. 2016): Distinguished because it involved dismissal after plan confirmation, a materially different statutory and procedural posture than pre-confirmation dismissal governed by § 1326(a)(2)’s return-of-payments rule.

8) Related procedural history

• In re Myers, No. 23-13081, 2024 WL 5252472 (11th Cir. Dec. 31, 2024): Noted to explain that Myers previously appealed related rulings but that appeal was dismissed for failure to prosecute (and affirmed), framing the litigation background without controlling the merits here.

B. Legal Reasoning

1) Statutory architecture: §§ 1326(a)(2), 503(b), 330(a), and 349

The opinion’s reasoning flows from the interaction of four provisions:

• § 1326(a)(2) (pre-confirmation payments held by trustee): If a plan is not confirmed, the trustee must return payments to the debtor after deducting any unpaid claim allowed under § 503(b).
• § 503(b) (administrative expenses): Allows “administrative expenses,” including compensation awarded under § 330(a).
• § 330(a)(4)(B) (Chapter 13 debtor’s counsel fees): Permits reasonable compensation for representing the debtor in connection with the bankruptcy case.
• § 349(b)(3) (effect of dismissal): Generally revests estate property in the prepetition holder, but “unless the court, for cause, orders otherwise.”

Myers’s core statutory contention was that dismissal (and § 349’s revesting norm) stripped the court of authority to “allow” administrative expenses and required that funds be returned to him. The panel rejected this, treating § 1326(a)(2) as the specific directive governing pre-confirmation plan payments and expressly conditioning return on the deduction of allowed § 503(b) expenses.

2) Jurisdiction survives dismissal for collateral matters

The panel relied on Cooter & Gell v. Hartmarx Corp. to characterize attorney’s fees determinations as collateral issues that can be decided after the underlying action terminates. It extended that logic to bankruptcy administrative expenses, finding no principled reason to treat § 503(b) fee determinations differently from other fee/cost determinations that survive termination.

The court also pointed to the bankruptcy court’s expressed intent and procedure: the initial dismissal ruling directed the trustee to submit an order, and the supplemental order explicitly reserved jurisdiction to decide timely applications for administrative expenses, including debtor’s attorney’s fees. That reservation reinforced that the estate’s wind-up (including § 1326(a)(2) refunds) remained within the court’s post-dismissal administrative control.

3) Timing: nothing in § 1326(a)(2) requires allowance before dismissal

The opinion treats Myers’s timing argument as atextual. Section 1326(a)(2) requires deduction of any unpaid claim “allowed under section 503(b),” but it does not say when allowance must occur. The panel emphasized § 503(a)’s timing language—requests may be “timely” or “tardily” permitted for cause—suggesting Congress contemplated procedural management of when such requests may be filed and decided.

4) Administrative Order FLMB-2020-7 as procedural implementation, not substantive alteration

Myers argued that the Administrative Order improperly modified substantive rights by allowing a 14-day post-dismissal filing window, allegedly contradicting § 349. The Eleventh Circuit disagreed on two levels:

• Substance/procedure distinction: Drawing on Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., the panel concluded the Administrative Order “regulate[s] only the process” (deadlines and refund mechanics) for implementing § 1326(a)(2)’s statutory command.
• Statutory fit: The panel reasoned that § 349(b)(3) does not directly govern post-petition wages used for plan payments because there was no prepetition vesting in such “future earnings,” citing Harris v. Viegelahn. Thus, § 1326(a)(2) operates as the controlling, specific return-and-deduction scheme for those funds.

5) “For cause, order otherwise” and bad-faith dismissal

Even assuming § 349 had more direct relevance, the panel underscored that § 349 allows the court to “order otherwise” for cause, citing In re Morris. It accepted the bankruptcy court’s view that, in the Middle District of Florida, the court had effectively done so through the Administrative Order’s standardized procedures.

The panel further found “cause” supported by practical and equitable considerations: collateral fee issues are commonly decided post-termination; requiring pre-dismissal fee adjudication could create incentives that delay dismissal and increase costs; and Myers’s case was dismissed as a bad-faith filing intended to delay and frustrate creditors, strengthening the justification for orderly administration and fee payment consistent with § 1326(a)(2).

6) Sanctions request denied

Although the court affirmed on the merits, it denied George’s motion to designate the appeal as frivolous and impose sanctions under Fed. R. App. P. 38, concluding she did not show the appeal itself lacked factual or legal support.

C. Impact

1) Practical rule for Chapter 13 trustees and debtor’s counsel (pre-confirmation dismissal)

The decision reinforces a workable administration rule: when a Chapter 13 case is dismissed before confirmation, undisbursed plan payments held by the trustee are not automatically refunded in full. Instead, trustees must comply with § 1326(a)(2) by paying any unpaid, allowed § 503(b) administrative expenses (notably debtor’s counsel fees) before refunding any remainder.

2) Post-dismissal jurisdiction clarified for fee allowance under § 503(b)

The opinion confirms (at least within the Eleventh Circuit’s reasoning) that dismissal does not strip bankruptcy courts of authority to decide collateral fee matters necessary to close out the estate and effectuate statutory refund procedures, aligning bankruptcy practice with general federal jurisdiction principles articulated in Cooter & Gell v. Hartmarx Corp..

3) Legitimacy of local procedural mechanisms implementing § 1326(a)(2)

By treating Administrative Order FLMB-2020-7 as procedural and consistent with the Code, the opinion provides appellate support for standardized, post-dismissal application windows—so long as they function to implement the statute rather than contradict it. It also signals that challenges framed as “local rule versus statute” will likely fail where the order plausibly governs process, not substantive entitlement.

4) Likely litigation effects

• Reduced incentives for delay: The court’s endorsement of post-dismissal fee resolution reduces pressure to litigate fees before dismissal (which could prolong cases that are otherwise ready to be terminated).
• Bad-faith context matters: Although the legal holding does not depend on bad faith, the “cause” analysis and equitable tone suggest courts may be especially receptive to structured wind-up orders where dismissal stems from abuse of process.
• Debtors’ expectations recalibrated: Debtors who make plan payments but fail to obtain confirmation should anticipate potential deductions for allowed administrative expenses even after dismissal—particularly where a local order prescribes a post-dismissal application period.

IV. Complex Concepts Simplified

• “Administrative expense” (§ 503(b)): A cost of running the bankruptcy case (e.g., trustee expenses, professional fees). Here, it includes debtor’s attorney compensation awarded under § 330(a).
• “Allowed” claim: A claim the court has approved as valid and payable under the Bankruptcy Code. Section 1326(a)(2) requires deduction only of unpaid claims that have been “allowed” under § 503(b).
• “Undisbursed plan payments”: Money the debtor paid to the trustee while trying to get a plan confirmed; if confirmation never occurs, § 1326(a)(2) governs how those funds are returned (including permitted deductions).
• “Revesting” under § 349(b)(3): The general idea that dismissal unwinds the bankruptcy and returns estate property to whoever held it pre-bankruptcy—subject to exceptions and “for cause” orders. The court emphasized that post-petition wage payments do not neatly fit this prepetition-vesting model.
• “Collateral jurisdiction” after dismissal: Even when the main case ends, a court may still decide side issues necessary to conclude the matter (fees, costs, sanctions). The court treated § 503(b) fee allowance as such a collateral issue.

V. Conclusion

The Eleventh Circuit’s decision cements a clear operational principle for unconfirmed Chapter 13 dismissals: § 1326(a)(2) requires trustees to return plan payments to the debtor only after paying any unpaid administrative expenses allowed under § 503(b), and bankruptcy courts may allow those expenses even after dismissal as a collateral matter necessary to wind up the case. The court further validated a local administrative order providing a short post-dismissal window for fee applications as a procedural implementation of the Code rather than an impermissible alteration of substantive rights under § 349. Finally, the court’s denial of Rule 38 sanctions underscores that, while unsuccessful, statutory-authority challenges of this kind may not be deemed frivolous when grounded in colorable legal arguments.