Supreme Court Takes Up Issue of “What is Defalcation”?

The case of Bullock v. BankChampaign, N.A. will be argued before the Supreme Court this Tuesday, March 18, 2013.  All of the briefs can be accessed here.  The debtor is charged with “defalcation by a fiduciary” making the debt non-dischargeable.  It seems that while he was the trustee of a trust, he borrowed money and bought a building.  When his brothers discovered the “loan,” he paid it back with interest.  The brothers wanted the building which had risen in value.  They sued him in state court and won.  He filed bankruptcy and the brothers filed a non-dischargeability complaint.  The bankruptcy court ruled against the debtor and found the debt to be non-dischargeable.  The district court and court of appeals affirmed.

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