Bullock v. BankChampaign, N.A., 569 U.S. ___, No. 11-1518
The Supreme Court issued an opinion earlier this week in the case of Bullock v. BankChampaign, N.A., discussing the mental state required for a debtor to have engaged in defalcation under 11 U.S.C. 523(a)(4). If a debtor had engaged in defalcation, the debt would be denied a discharge.
The facts underlying the case are relatively straightforward. Randy Bullock, the petitioner, was named as trustee for a trust created by his father. The sole asset of the trust was a life insurance policy on the father. The beneficiaries of the trust were the siblings of the trustee, and the trustee himself. On three separate instances the trustee borrowed money from the trust in order to purchase real property, to purchase certificates of deposit which were in turn used to purchase a mill, and to repay debts owed by his mother to the business of the father. All borrowed funds were repaid with 6% interest.