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Interpretation of Defalcation

Interpretation of Defalcation

May 22nd, 2013 by lawfirm

In a decision handed down on Monday, May 13, 2013, the United States Supreme Court resolved a split in the circuits regarding interpretation of the term “defalcation” in the context of dischargeability litigation. In Bullock v. BankChampaign, N.A., 11-1518, the Court in a unanimous ruling opted for a narrow construction of the term “defalcation.”  Unless there is bad faith, moral turpitude, or other immoral conduct, there must be an intentional wrong on the part of a fiduciary before a court can conclude that the fiduciary committed a defalcation.

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