"[S]ometimes a debtor is liable for fraud that she did not personally commit," held the U.S. Supreme Court on Feb. 22, 2023, when the debtor's business partner had deceptively obtained money by fraud, thereby making the innocent partner liable for a nondischargeable debt under Bankruptcy Code (Code) §523(a)(2)(A) ("any debt from money "obtained by … fraud" not dischargeable and survives debtor's bankruptcy).
Innocent Business Partner's Fraud Liability Survives Bankruptcy
The decision by the Supreme Court has practical significance for corporate officers and others in an agency or partnership relationship, and also may have serious consequences for corporate Chapter 11 debtors whenever a "domestic governmental unit" is a creditor.
By
Michael L. Cook
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