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Sutherland Partner Thomas M. Byrne Argues Bankruptcy Case in U.S. Supreme Court

March 18, 2013

ATLANTA (March 18, 2013) – Sutherland Asbill & Brennan LLP Partner Thomas M. Byrne delivered oral argument today at the United States Supreme Court in a pro bono case brought in conjunction with the Emory Law School Supreme Court Advocacy Project (ELSSCAP), a student-run Supreme Court litigation group.

"As a firm, we are honored to share the opportunity to participate in a Supreme Court case with these students," said Sutherland Pro Bono Partner John H. Fleming. "And we are grateful for Tom’s outstanding leadership in bankruptcy litigation and appellate matters, as well as his commitment to pro bono service."

The court granted review in Bullock v. BankChampaign, N.A. to resolve a circuit split regarding interpretation of a provision of the Bankruptcy Code — specifically, whether a fiduciary’s misconduct must be committed with the intent to defraud or the equivalent in order to prevent a debt from being discharged, particularly when there was no loss of trust assets. Such misconduct is referred to as "defalcation" in the Bankruptcy Code.

Bullock concerns a family dispute over the administration of a trust whose sole asset was a $1 million death benefit from the father’s life insurance policy. Byrne and ELSSCAP represent the petitioner, who was the trustee.

"Under the Bankruptcy Code, ‘defalcation’ can be a basis for refusing to grant discharge of a debt," said Byrne. "In our case, there is a judgment of a state court for breach of fiduciary duty relating to a family trust, but it acknowledges the debtor had no apparent malicious intent as to the trust and that there was no actual loss of trust principal." 

The circuit courts are divided over what mental state must be shown to prevent discharge of a fiduciary’s debt. Byrne and ELSSCAP argue that the Supreme Court should adopt the holdings of the First and Second Circuits, whose interpretation of the Bankruptcy Code requires that the fiduciary must have acted with the same wrongful intent required in securities fraud cases.

Students also worked with Professor Sarah Shalf, ELSSCAP’s faculty adviser and director of Emory’s Field Placement and Professionalism programs, and James Engelthaler of Thigpen, Behel, Engelthaler & Scott, counsel for ELSSCAP’s client in the lower appellate courts.

ELSSCAP is a student-run pro bono litigation program of Emory Law School that provides students the opportunity to engage in constitutional issues that merit being heard by the U.S. Supreme Court. ELSSCAP looks for meritorious cases to take before the Supreme Court, both in seeking a grant of certiorari and in filing an amicus brief to add additional perspective on an issue in a given case.

Sutherland Asbill & Brennan LLP is a law firm with global reach known for solving challenging business problems and resolving sophisticated legal issues for many of the world’s largest companies. Founded in 1924, the firm handles matters throughout the United States and worldwide. Seven major practice areas—corporate, energy and environmental, financial services, intellectual property, litigation, real estate, and tax—provide the framework for an extensive range of focus areas, allowing Sutherland attorneys to serve a diverse client base that ranges from small and medium-sized start-up businesses to a significant number of Fortune 100 companies.

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Adam C. Pollet, Associate
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