Chapter 11 Bankruptcy in Alabama: 6 Things That Differ Across the State's Districts

No United States Trustee has any say in a Chapter 11 case filed in Birmingham, Montgomery, or Mobile. The Justice Department's own directory of U.S. Trustee regions and offices states that bankruptcy cases in Alabama and North Carolina "are not under the jurisdiction of the United States Trustee Program," and it sends every question about those cases to the Bankruptcy Administrator for the district where the case is pending.

Everything else an owner reads about chapter 11 bankruptcy in Alabama still holds. The Bankruptcy Code does not change at the Chattahoochee; the automatic stay, the $3,424,000 Subchapter V debt ceiling in force since April 1, 2025, and the cash collateral rules of section 363 apply in Dothan exactly as they apply in Denver. The machinery around the case is another matter, and Alabama's machinery departs from the national pattern, and from district to district inside the state, in six places.

1. The Supervisor of an Alabama Case Answers to the Judiciary

Each of the three districts has its own Bankruptcy Administrator, with its own office and its own website. The Northern District describes the Bankruptcy Administrator's office as "an agency of the Judiciary" that "oversees the administration of bankruptcy cases and private trustees." The Middle District traces the program to Public Law 99-554, section 302(d)(3)(I), and says its administrators "supervise the administration of cases and trustees in cases under chapters 7, 11, 12, 13 and 15."

In most of the country that supervisory work belongs to the United States Trustee, a component of the Department of Justice and therefore of the executive branch. Here it sits inside the court system (the same branch of government, to be precise, whose judges will decide the case, although the administrator decides nothing a judge decides and holds no gavel of any kind).

For an owner the practical translation is mechanical. National guides, law firm pages, and forms downloaded out of habit speak of "the U.S. Trustee" as the office that reviews a debtor's reports and watches over its trustee. In an Alabama case that role runs through the Bankruptcy Administrator, and the paperwork carries the administrator's own labels. The Southern District, for instance, posts monthly report forms titled BA1Bus and BA1Ind, revised February 27, 2018, beside its chapter 11 standing order.

Whether the difference alters the outcome of an ordinary small business case, or alters only the letterhead on the correspondence, is a question the published materials leave open.

2. Three Districts, and a Northern District Whose Map Changed in 2024

Under 28 U.S.C. 81, "Alabama is divided into three judicial districts to be known as the Northern, Middle, and Southern Districts of Alabama." The current text gives the Northern District five divisions: Northwestern at Florence, Northeastern at Huntsville, Southern at Birmingham (Blount, Jefferson, and Shelby counties), Eastern at Anniston, and Western at Tuscaloosa. The Middle District sits at Montgomery, Dothan, and Opelika. The Southern District has two divisions, Selma and Mobile.

The Birmingham court has acknowledged the change in its own rules, which now note that Local Rule 1071-1, its old divisional rule, "has been abrogated by 28 U.S.C. § 81 (2024) (Eff. 10/1/2025)." A Tuscaloosa company whose lawyer last filed there some years ago should expect the division list to look different from the one remembered.

The courthouses are where one would expect them. The Northern District's Birmingham court occupies the Robert S. Vance Federal Building at 1800 Fifth Avenue North, with other offices at 660 Gallatin Street SW in Huntsville and 1100 Gurnee Avenue in Anniston; the Middle District clerk is at One Church Street in Montgomery; the Southern District is at 113 St. Joseph Street in Mobile. Which of them hears a given case is a venue question under 28 U.S.C. 1408, which looks to domicile, residence, principal place of business, or principal assets during the 180 days before filing (or the longer part of that period), or to an affiliate's pending case.

3. The Quarterly Fee Check Is Payable to the Clerk

Outside Alabama and North Carolina, a chapter 11 debtor that has not elected Subchapter V pays quarterly fees to the United States Trustee Program under 28 U.S.C. 1930(a)(6). The Southern District of Alabama's Chapter 11 page says chapter 11 cases there are subject to a quarterly fee "payable to the Clerk, U. S. Bankruptcy Court." The court also posts a Revised Chapter 11 Standing Order bearing the date 05-09-2018.

A small point. It is also the kind of detail a lawyer from outside the state can get wrong on the first payment.

4. Birmingham's Local Rules Leave Chapter 11 to the National Rules

The Northern District's local rules, in the version dated March 1, 2023, contain no rule written for chapter 11 as such. The table of contents runs from Rule 1006-1 to Rule 9070-1, and none of the entries between them is a chapter 11 rule, a cash collateral rule, or a first-day rule.

So in Birmingham the Code, the Federal Rules of Bankruptcy Procedure, and the individual judge's orders carry the weight that a local rule carries elsewhere. Silence of that kind is not an absence of expectations. It means the expectations live in orders and in practice, where a newcomer will not find them written down in one place.

5. The Homestead Figure Moves With the Calendar

Alabama's homestead exemption began from a $15,000 statutory base in Ala. Code 6-10-2 and has been adjusted for inflation every three years under section 6-10-12. The State Treasurer's table of adjustments lists $15,500 as of July 1, 2017, $16,450 as of July 1, 2020, $18,800 as of July 1, 2023, and $20,475 as of July 1, 2026. The land itself may not exceed 160 acres. The personal property exemption has moved in parallel, reaching $10,225 in the 2026 adjustment.

And then the lag. The Treasurer's page quotes the statute: "The adjusted amounts apply to exemptions claimed on or after April 1 following the adjustment date." An owner who files a personal case in the autumn of 2026 therefore cannot assume the July figure governs (the April 1 language suggests the new number waits until April 1, 2027, although no court decision on the point was located, and a debtor whose house carries real equity should have counsel read the statute against the actual petition date rather than trust anyone's table, this one included).

An enrolled 2026 bill, HB96, would rewrite sections 6-10-1 and 6-10-2. Its enactment could not be confirmed from an official act number, and nothing on this page treats it as law.

None of this protects the company. A homestead belongs to an individual; an Alabama LLC has no house to exempt. The exemption matters to a sole proprietor, who files as a person, and to an owner whose personal guaranty of the company's merchant cash advance has become the larger problem.

6. No Alabama Disclosure Statute Sits Beside the Funder's Contract

California, New York, Texas, and Georgia each regulate how commercial financing, merchant cash advances included, must be disclosed before an owner signs. Research for this page found no Alabama statute of that kind, though the search was not a section-by-section review of the Code. For an Alabama owner the consequence is plain: the contract, together with whatever law its choice-of-law clause selects, is the whole record, with no state-mandated disclosure beside it to measure the terms against.

The contract is also where a non-bankruptcy review begins. Delancey Street is not a law firm; it does not file petitions in any Alabama district, deal with an Alabama Bankruptcy Administrator on a debtor's behalf, or give legal advice. It reviews, without charge and in confidence, the merchant cash advances and other obligations a company carries, to judge whether a negotiated resolution is realistic, and it brings in independently licensed counsel where the matter requires legal work. The review describes options; it does not promise that any funder will accept terms. It does not depend on an Alabama office, and Delancey claims none.

Some Alabama businesses should skip that conversation. A company facing a foreclosure sale, a lease it must reject, or a funder that has already frozen its operating account needs a bankruptcy lawyer admitted in the right district, and the first call belongs there. For everyone else the first document worth reading is still the contract, which in Alabama arrives with no disclosure form attached.