Supreme Court Rejects Strict Liability for Discharge Violations - ABI

The Supreme Court yesterday rejected a strict-liability standard for the imposition of contempt for violating the discharge injunction, according to a special analysis by ABI Editor-at-Large Bill Rochelle. Instead, the justices held unanimously that the bankruptcy court “may impose civil contempt sanctions when there is no objectively reasonable basis for concluding that the creditor’s conduct might be lawful under the discharge order.” The opinion for the Court by Justice Stephen G. Breyer also rejected the Ninth Circuit’s idea that a subjective, good faith belief about the inapplicability of the discharge injunction is a defense to contempt. It is unclear from the opinion whether the Court’s standard for a discharge violation also applies to violations of the automatic stay under Section 362. Read more.
ABI will hold a live media webinar tomorrow at 11 a.m. EDT featuring Bill Rochelle speaking with Nicole Saharsky of Mayer Brown, who was the Counsel of Record for the Respondents, and Hon. Eugene Wedoff (ret.), who joined an amicus brief in support of the petitioner. Register here to join tomorrow's media webinar (no CLE).

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