Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...
By Diane Davis
The U.S. Supreme Court will try to settle a dispute over how much weight bankruptcy courts should give a statement made by debtors about a single aspect of their finances that’s not in writing, an issue that has divided appeals courts.
In accepting review Jan. 12, the justices will dive into the case of R. Scott Appling, who told his bankruptcy lawyers that he would pay his legal fees with an anticipated tax refund but wound up spending that money on his business, according to court papers.
The law firm sued and received a judgment for its fees. Appling then filed for bankruptcy, but that court refused to discharge or wipe out that debt. A district court upheld the bankruptcy court decision, but the U.S. Court of Appeals for the Eleventh circuit went the other way.
The case turns on two points in bankruptcy law.
First, what elements constitute a debtor’s financial condition for the purposes of discharging, or wiping out debt? Can it be a single line item, like promises of a tax refund, or must it be a fuller picture of net worth, hard assets and liabilities? And second, should debtors be held more accountable for falsely representing their finances even if they don’t do so in writing?
Federal appeals courts are split.
The Eleventh Circuit said that the single statement, not in writing, about the tax refund can reflect, or respect, the debtor’s financial condition and justify a debt discharge even if it’s false. But the Fifth, Eighth, and Tenth circuits have taken contrary views about such financial statements in other cases.
The case is Lamar, Archer & Cofrin, LLP v. R. Scott Appling , U.S., No. 16-1215, review granted, 1/12/18 .
To contact the reporter on this story: Diane Davis in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at email@example.com
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)