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This case presents the Supreme Court with the opportunity to decide whether courts have the authority to grant defense-fee awards when a law firm defends itself against its bankruptcy client’s objections to legal fees. Brief for Petitioner Baker Botts at (i). ASARCO argues that § 330 of the Bankruptcy Code (“the Code”) does not permit awards for compensation to bankruptcy practitioners for successfully defending fee applications. Brief for Respondent at 16. In opposition, Baker Botts contends that § 330 gives courts broad discretion to award compensation for services that are necessary to the administration of bankruptcy cases, including successfully defending fee applications. Brief for Petitioners at 23. The Supreme Court’s decision in this case will impact the compensation of bankruptcy lawyers and the rights of bankruptcy clients. See Brief of Amicus Curiae the Committee On Bankruptcy and Corporate Reorganization of the Association of the Bar of the City of New York, The Business Law Section of the Florida Bar, et al. (“New York City and Florida Bar Associations”), in Support of Petitioners at 9; Brief of Amicus Curiae Bankruptcy Law Scholars, in Support of Petitioners at 25; Brief for Petitioners at 23 (quoting § 330(a)(C)).

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The Supreme Court will determine whether 11 U.S.C. § 506(d) permits bankruptcy courts to “strip off” junior liens on property if the value of the property used as collateral is less than the amount the debtor owes to the senior lienholder—in other words, the junior mortgage lien is “completely underwater.” Bank of America asserts that junior liens should not be “stripped off,” or treated as unsecured loans, because § 506 only “strips off” claims from property that are disallowed and because the Supreme Court’s ruling in Dewsnup v. Timm, disallowing “stripping down” of primary liens to the value of the underlying property, should extend to this case. Caulkett and Toledo-Cardona argue that second liens should be treated as unsecured, and hence disallowed, loans when the value of the collateral exceeds the amount owed on the first mortgage and that the Supreme Court’s ruling in Dewsnup is limited to “stripping down” and should not extend to these circumstances. The Court’s ruling impacts the right of junior lienholders to collect on loans in the event of a debtor’s declaration of bankruptcy and the treatment of previously secured, but subordinate, debt in bankruptcy proceedings. 

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This case asks the Supreme Court to decide whether a member of a partnership is prohibited from discharging debt fraudulently incurred by their partner without their knowledge. Kate Bartenwerfer argues that the Court cannot prohibit her from discharging debts in bankruptcy merely because those debts were obtained by her partner’s imputed fraud that she was not responsible for. Kieran Buckley counters that the Bankruptcy Code asks only whether debts were obtained by fraud and does not draw distinctions based on whether any individual debtor is responsible for that fraud. This case has implications for prioritizing relief to debtors or creditors in bankruptcy and for the liabilities of individuals in a marriage or domestic partnership.

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Randy Bullock filed for bankruptcy in 2009 to discharge a judgment debt from a 1999 lawsuit brought by his brothers. His brothers had sued him for breach of fiduciary duty as trustee of their father's trust. Bullock was appointed trustee in 1978, and without the beneficiaries' knowledge, took three loans from the trust, which he ultimately paid back in full. In 2002, an Illinois state court awarded the brothers damages of $285,000, concluding that Bullock did not appear to have malicious intent, but that he indisputably engaged in self-dealing, thus violating his fiduciary duty. After filing for bankruptcy, BankChampaign, N.A., who was appointed successor trustee, sued Bullock pursuant to 11 U.S.C. § 523(a)(4), claiming that he could not discharge the judgment debt because it arose from a "defalcation." The court concluded that Bullock's self-dealing constituted defalcation, and the district court and Eleventh Circuit affirmed. The Supreme Court's decision will determine what level of misconduct by a trustee rises to "defalcation" under the Bankruptcy Code.

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After filing for chapter 11 bankruptcy, Wallace's Bookstores, Inc., formerly a national, private supplier of college books, filed complaints against four public higher education institutions in Virginia. As Wallace's court appointed  a liquidator , Mr. Katz sought to recover money owed by the Virginia Institutions. The Virginia Institutions argue that as a private party, Mr. Katz cannot sue the state or "arms of the state" without abrogating the states' sovereign immunity guaranteed under  the Eleventh Amendment. They maintain that without consent, states cannot be sued by private parties. Mr. Katz denies being classified as a private party and argues that Article I's provisions and purpose of uniform bankruptcy laws across states are an exception. This case raises numerous public policy issues relating to funding of public, higher education institutions and debtor/creditor relationships.

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This case asks the U.S. Supreme Court to determine whether an entity that passively possesses a debtor’s property must turn over that property to the bankruptcy estate under the Bankruptcy Code’s automatic stay provision. Petitioner City of Chicago argues that the automatic stay provision requires debtors and creditors to maintain the status quo as of the petition date, which, among other things, means that creditors cannot take actions to control property of the estate. Chicago maintains that passive possession does not constitute action. Further, Chicago asserts that because the automatic stay freezes the status quo, debtors must seek a court order compelling the turnover of property lawfully repossessed pre-petition. Respondents Robbin L. Fulton and others counter that the automatic stay language plainly requires that all the debtor’s property be transferred to the trustee or debtor and that passive retention is an act of restraint in violation of the automatic stay. Additionally, Fulton and others contend that the turnover duty is mandatory and does not require a court order. The outcome of this case has important implications on debtors’ and creditors’ bankruptcy rights, public safety, and the financial well-being of debtors and local governments.

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In October 2010, Heidi Heffron-Clark and Brandon Clark filed a voluntary joint Chapter 7 bankruptcy and claimed an inherited IRA under the retirement funds exemption of Section 522 of the Bankruptcy Code. The bankruptcy trustee and creditors objected to the claimed exemption. The district court concluded that inherited IRAs are exempted because they do not lose their character as retirement funds once they are passed onto the beneficiary. The Seventh Circuit Court of Appeals reversed the district court’s decision, stating that an inherited IRA does not qualify for a retirement fund exemption because it was not set aside for the debtor’s retirement. The United States Supreme Court must decide if an inherited IRA constitutes a “retirement fund” under Section 522. This case implicates debtors’ and creditors’ access to inherited IRAs once a debtor files for bankruptcy.

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