Trustee Can't Surcharge Debtor's Property, High Court Says

Law360, Washington (March 4, 2014, 2:01 PM EST) -- The U.S. Supreme Court ruled in a unanimous opinion Tuesday that bankruptcy trustees cannot impose a surcharge on exempted property due to a Chapter 7 debtor's misconduct, acknowledging that the decision may impose “inequitable results” for trustees and creditors.

In reversing the Ninth Circuit's decision in Law v. Siegel, the high court said that a bankruptcy court's $75,000 surcharge on the bankrupt petitioner, Stephen Law, was illegal because it exceeded the limits of its authority under the Bankruptcy Code, even though Law had committed litigation misconduct...
To view the full article, register now.