The Supreme Court recently issued a ruling in Bartenwerfer v. Buckley, a case that addressed whether a debtor could discharge a debt obtained by fraud committed by someone other than the debtor. The Supreme Court ruled that such debt is non-dischargeable because, under the Bankruptcy Code, the relevant question is how the money was obtained—not who committed the fraud to obtain it.

Discussing this case with Turnarounds & Workouts, partner Shai Schmidt explained how the Supreme Court’s decision could foreshadow how it may approach other cases involving statutory interpretation and whether it will choose to focus solely on statutory language instead of extra-statutory policy considerations. Shai noted, for example, that “the Supreme Court’s decision in Bartenwerfer may indicate how closely the Supreme Court will adhere to language of the Bankruptcy Code” when deciding the issue of nonconsensual third-party releases. This issue, which may hinge on whether the Bankruptcy Code expressly authorizes such releases, is currently on appeal at the Second Circuit in the Purdue case and may eventually reach the Supreme Court. 

The full article can be viewed here. A full-text copy of the March 2023 Turnarounds & Workouts newsletter is available here