After a century and a half of uncertainty, the U.S. Supreme Court yesterday finally decided the meaning of "defalcation," a word in the Bankruptcy Code that can refer to embezzlement but also, more generally, misuse of funds, Reuters reported yesterday. In a unanimous decision in Bullock v. BankChampaign, N.A., the court said yesterday that for a court to make a defalcation finding about a trustee, the person in question must be acting with gross negligence or have some knowledge that what he or she is doing is improper. The court handed a victory to Randy Bullock, an Illinois man who filed for bankruptcy. Bullock wanted to discharge debt concerning money he owes for his role overseeing his father's life insurance trust. He used money from the trust to make investments for himself and other family members. He eventually paid the money back with interest. The question before the court was whether Bullock's actions, which did not deprive the trust of any money, fit within the legal definition of defalcation. The court did not make a final determination on that point, instead remanding the case back to the district court so that the new definition of defalcation can be applied.
http://newsandinsight.thomsonreuters.com/Bankruptcy/News/2013/05_-_May/…
To read the Supreme Court's opinion or for more on Bullock v. BankChampaign, N.A., please click here: http://news.abi.org/supreme-court/bullock-v-bankchampaign-na