Husky International Electronics, Inc., v. Ritz (578 U.S. 355)
U.S. Supreme Court · decided May 16, 2016 · Supreme Court Database (Spaeth)
- Citation
- 578 U.S. 355 · 136 S. Ct. 1581
- Decided
- May 16, 2016
- Term
- October Term 2015
- Vote
- 7–1
- Majority author
- Justice Sotomayor
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice SOTOMAYOR delivered the opinion of the Court. The Bankruptcy Code prohibits debtors from discharging debts “obtained by ... false pretenses, a false representation, or actual fraud.” 11 U.S.C. § 523(a)(2)(A). The Fifth Circuit held that a debt is “obtained by ... actual fraud” only if the debtor’s fraud involves a false representa-, tion to a creditor. That ruling deepened an existing split among the Circuits over whether “actual fraud” requires a false representation or whether it encompasses other traditional forms of fraud that can be accomplished without a false representation, such as a fraudulent conveyance of property made to evade payment to creditors. We granted certiorari to resolve that split and now reverse. I Husky International Electronics, Inc., is a Colorado-based supplier of components used in electronic devices. Between 2003 and 2007, Husky sold its products to Chrysalis Manufacturing Corp., and Chrysalis incurred a debt to Husky of $163,999.38. During the same period, respondent Daniel Lee Ritz, Jr., served as a director of Chrysalis and owned at least 30% of Chrysalis’ common stock. All parties agree that between 2006 and 2007, Ritz drained Chrysalis of assets it could have used to pay its debts to creditors like Husky by transferring large sums of Chrysalis’ funds to other entities Ritz controlled. For instance — and Ritz’ actions were by no means…
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