On February 22, 2023, the United States Supreme Court (“the Supreme Court”) issued its Opinion in the matter of Bartenwerfer v. Buckley, No. 21-908, LEXIS 943 (Feb. 22, 2023), holding that per 11 U.S.C. § 523(a)(2)(A), a partnership member is not entitled to discharge a debt incurred by the fraud of another partnership member, regardless of the fact the innocent member had no knowledge of the fraud.

Background

In the United States Court of Appeals for the Eleventh Circuit’s (“the Court”) recently issued decision In re Bozeman, 2023 U.S. App. LEXIS 545 (11th Cir., Jan. 10, 2023, No. 21-10987), the Court struck a decisive victory in favor of Mortgage lenders’ rights, holding that in a battle for supremacy between anti-modification protections and a court-confirmed bankruptcy plan, a lender’s rights will always prevail as the victor.

In Berryman v Zurich Australia Ltd [2016] WASC 196 it was decided that a bankrupt's entitlement to claim a TPD benefit under a life insurance policy is not an entitlement that is divisible amongst the bankrupt's creditors, and therefore such an entitlement does not vest in the Official Trustee in bankruptcy. Tottle J of the Supreme Court of Western Australia ruled that the bankrupt insured could continue an action in his own name to recover the TPD benefit. Life insurers may need to adjust their claims' payment practices in light of the Berryman decision.