Fraud debts in bankruptcy
Randy Curtis Bullock v. BankChampaign, N.A.
In brief
The Court wiped out the appeals court’s ruling and sent Bullock’s case back under a knowing-wrongdoing or gross-recklessness test, leaving whether his debt can be erased unresolved.
- Where it stands
- Decided
Decided · May 13, 2013 · Opinion by Justice Breyer
- What it’s about
- In a dispute over whether Randy Curtis Bullock’s debt from a breach of trust could be erased in bankruptcy, the Supreme Court ruled that “defalcation” requires knowing wrongdoing or gross recklessness about whether the fiduciary’s conduct was improper.
- Who it affects
- The Eleventh Circuit must apply the new test to Bullock’s debt; whether that debt can be erased in bankruptcy remains undecided.
Summary: written with AI from the case record.
What it's about
The Court wiped out the appeals court’s ruling and sent the case back to apply that standard; it did not decide whether Bullock’s debt qualified.
The Bankruptcy Code bars erasing certain debts tied to fraud or wrongdoing by someone acting in a position of trust.
Question presented
Are debts arising out of fraud or defalcation in a fiduciary capacity dischargeable in a Chapter 7 bankruptcy proceeding?
What the Court decided
Holding
The term “defalcation” in the Bankruptcy Code includes a culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior. Pp. 4 − 9. 670 F. 3d 1160, vacated and remanded.
- Result
- Vacated
The vote
- Majority author
- Stephen G. Breyer
What's next
The Eleventh Circuit will consider Bullock’s case under this standard. Whether his debt can be erased remains unresolved.
Documents
Opinions
Audio
Docket activity
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Audio Recording added: Oral Arguments - Bullock
Opinion added: Bullock
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.