The U.S. Bankruptcy Code provides that a personal debt is not dischargeable if the debt had been occasioned by the debtor’s defalcation while acting in a fiduciary capacity. Courts of appeals had long disagreed about the mental state that must accompany the bankruptcy-related definition of “defalcation,” particularly in the context defalcation by trustees. The U.S. Supreme Court has recently settled the matter. Charles E. Rounds, Jr. explains in an updated version of Section 7.4 of Loring and Rounds: A Trustee’s Handbook (2013).
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Topics: Defalcation Exception, Dischargeable Debts, Fiduciary Duty, SCOTUS, Trustees
Published In: Administrative Agency Updates, Bankruptcy Updates, Business Organization Updates, Civil Remedies Updates, Wills, Trusts, & Estate Planning Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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