U.S. Supreme Court Remands Bankruptcy Defalcation Case, Says Higher Standard Needed

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on May 13 unanimously vacated and remanded a case involving a bank's claim that a debtor who had acted as trustee for his father's insurance trust was guilty of defalcation for making loans to himself during the time he had control of...

Bullock v. BankChampaign, 2013 U.S. LEXIS 3521 (May 13, 2013)

LexisNexis Core Overview: Nonprofessional trustee was improperly denied a discharge of a debt in bankruptcy based on fiduciary defalcation under 11 U.S.C.S. § 523(a)(4) [ an annotated version of this statute is available to lexis.com subscribers ] since the trustee repaid loans for the trustee's...

Supreme Court Sets Defalcation Bar at Gross Recklessness under Section 523(a)(4)

In the only bankruptcy case pending before it this term, a unanimous Supreme Court has ruled that the archaic term "defalcation" used in 11 U.S.C. Sec. 523(a)(4) requires knowledge of, or gross recklessness in respect to, the improper nature of the relevant fiduciary behavior complained...

US Supreme Court Deciphers "Defalcation" in Bullock: A Canonical Exercise in "Reading Law" (Scalia/Garner)

The US Supreme Court has long taught the importance of certain canons of interpretation unique to bankruptcy law, the more significant ones being: The Fresh-Start Policy : A primary purpose of bankruptcy is to relieve the debtor "from the weight of oppressive indebtedness and permit...

US Supreme Court's Decision in Bullock: A Significant Development in Determining "Recklessness" Under Federal Law?

Last week I published a blog post on the US Supreme Court's unanimous decision in Bullock v. BankChampaign, N.A. , No. 11-1518 (May 13, 2013) ( pdf ) [ an enhanced version of this opinion is available to lexis.com subscribers ], that focused on the Court's application of the noscitur a sociis...

Professor Kenneth N. Klee on the Supreme Court's Holding in Bullock v. BankChampaign, N.A., 569 U.S. __, 2013 U.S. LEXIS 3521 (May 13, 2013)

Professor Kenneth Klee analyzes the May 13, 2013 Supreme Court ruling in Bullock v. BankChampaign, N.A. (In re Bullock) which settled a longstanding circuit split concerning the meaning of the word "defalcation" in the Bankruptcy Code exception to discharge in § 523(a)(4) by holding...

U.S. Supreme Court Will Hear Bankruptcy Case Involving Charge on Debtor’s Property

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on June 17 granted certiorari in a case involving the question of whether a bankruptcy court has the power to levy a financial charge against a Chapter 7 debtor's residential property, which he has claimed falls under the homestead exemption...

Supreme Court to Consider Pro Se Challenge to Exemption Surcharge

In an unusual move, the Supreme Court granted cert yesterday to consider the petition of a California man who filed a pro se petition for cert seeking to review the decision of a bankruptcy court to surcharge his homestead exemption under section 105. No. 12-5196, Law v. Siegel . The petition for...

U.S. Supreme Court to Rule on Bankruptcy Judges’ Power in ‘Core’ Proceedings

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on June 24 granted certiorari in a case dealing with the questions of whether Article III of the U.S. Constitution permits the exercise of the judicial power of the United States by bankruptcy courts on the basis of litigant consent and whether...

Pfizer Faces Asbestos Actions after Supreme Court Declines to Hear Case

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on June 24 denied a bid for certiorari by Pfizer Inc. of a ruling removing the protection for Pfizer of a bankruptcy injunction barring asbestos personal injury claims entered in the case of a defunct Pfizer subsidiary ( Pfizer Inc. v. Law...

U.S. High Court Will Not Hear Bankruptcy Case Dealing with Fraudulent Transfers

WASHINGTON, D.C. — (Mealey's) The U.S. Supreme Court on Oct. 7 refused to hear a case in which the 10th Circuit U.S. Court of Appeals had affirmed that fraudulently transferred property is not part of a bankruptcy estate until it is recovered ( Eric C. Rajala v. Robert H. Gardner, et al , No...

Supreme Court Will Not Hear Bankruptcy Case Dealing with ‘New Value’ Defense

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on Oct. 7 refused to hear a case in which a Chapter 7 trustee argued that a bankruptcy estate should be permitted to recover more than $1.37 million that an insurance company received from a debtor company because the insurer failed to...

U.S. High Court To Rule On Bankruptcy Exemption For Inherited Retirement Accounts

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on Nov. 26 granted certiorari in a case in which a debtor couple contend that high court review is needed to settle a split in the circuit courts regarding whether Chapter 7 debtors are permitted to exempt money in an inherited individual...

Professor Kenneth N. Klee on a Preview of the Supreme Court's Ruling in In re Clark: Whether Inherited IRAs Are Exempt Property Under Bankruptcy Code Sections 522(b)(3)(C) and 522(d)(12)

I. Introduction; Fifth and Seventh Circuit Split The Supreme Court recently granted certiorari in In re Clark , 714 F.3d 559 (7th Cir. 2013) [ an enhanced version of this opinion is available to lexis.com subscribers ], cert. granted , 2013 U.S. LEXIS 8421 (Nov. 26, 2013) (No. 13-299), to resolve a circuit...

American Bankruptcy Institute Supreme Court Preview: Appellate Advocate Eric Brunstad Speaks with ABI Resident Scholar Kara Bruce about Upcoming Bankruptcy Cases

With the Supreme Court due to hear oral argument on a critical bankruptcy case on January 14, ABI has released the following free video preview of the upcoming High Court bankruptcy cases. This 75-minute program features ABI Resident Scholar Kara Bruce talking with noted appellate advocate and law professor...

Professor Kenneth N. Klee on the Supreme Court's Holding in Law v. Siegel

Professor Kenneth Klee analyzes the March 4, 2014 Supreme Court ruling in Law v. Siegel which held that a bankruptcy court exceeds its authority when it permits a surcharge on a debtor's otherwise exempt assets to pay administrative expenses incurred as a result of a chapter 7 debtor's misconduct...

U.S. Supreme Court Will Not Hear Bankruptcy Lien Case Brought by Bank of America

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today said it would not hear a case in which Bank of America had argued that the high court needed to resolve a split at the federal appellate level dealing with whether a Chapter 7 debtor may “strip off,” or void, a valid junior...

U.S. Supreme Court Court Will Not Hear Debt Payment Case Involving American Airlines

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today declined to hear a case in which U.S. Bank Trust NA (U.S. Bank) argued that bankrupt AMR Corp., the parent company of American Airlines Inc., owed its bondholders a penalty fee related to the repayment of debt for which it had obtained...

Hopelessly Confused SLUSA Issues for Ponzi Scheme Victims Following Troice?

As reported in The Ponzi Scheme Blog , the Supreme Court recently issued an important decision further defining the boundaries of SLUSA – the Securities Litigation Uniform Standards Act of 1998. Chadbourne & Park LLP v. Troice , 2014 U.S. LEXIS 1644 (Feb. 26, 2014) [ an enhanced version of...

Did the Second Circuit Get SLUSA Right in the Madoff Ponzi Scheme Case?

In a very short and summary opinion, the Second Circuit concluded that nothing in a recent Supreme Court decision gave it any reason to revisit its prior ruling that SLUSA bars state law class action claims against banks in connection with the Bernard Madoff scheme. In re Herald, Primeo, and Thema ,...

Professor Kenneth N. Klee on the Supreme Court's Holding in Clark v. Rameker

Excerpt: ARTICLE: I. The Lesson to Be Learned: Despite a long line of precedent broadly construing a debtor's exemptions, the Court will break from a textualist plain-meaning statutory construction when such a construction would undermine what the Court believes to be congressional intent in...

Both Sides Support Cert in Appeal of Order Denying Chapter 13 Plan

The Supreme Court may add another bankruptcy case to its agenda this term in a case where both the Petitioner and the Respondent support the grant of cert. No. 13-1416, Gordon v. Bank of America . The Petition can be found here and the Response in Support is here . Of course, the parties want to reverse...

Supreme Court to Decide If Bankruptcy Lawyers Can Get Fees For Pursuing Bonus Fees

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on Oct. 2 agreed to decide whether the U.S. Bankruptcy Code gives bankruptcy courts discretion to award lawyers their fees for successfully defending applications for enhanced attorney fees ( Baker Botts, LLP, et al. v. ASARCO, LLC , No...

NCBJ 2014: Ethics and Supreme Debate

Saturday concluded NCBJ with ethics and the Supreme Court review. (There was also a program on scientific studies of mindfulness which I missed). Wait, Wait, Don’t Tell Me! An Ethics Game Show: Retired Judge James H. Haines as Peter Segal, Christine Devine (DeMaillie & Lougee), Judge Benjamin...

Supreme Court to Hear Dispute Over Fees for Defending Fee Application

The Supreme Court doesn't take many cases on bankruptcy issues. It has only ruled on attorney's fees in bankruptcy once since the Code was adopted and that ruling was on the narrow issue of whether a chapter 7 debtor's attorney could recover fees from the estate. As a result, it was big news...