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Busseto Foods Inc. v. Laizure (In re Laizure)

Ruling
Creditor had valid claim for funds embezzled by debtor, despite prior disallowance, as recovery by trustee restored claim to prepetition status.
Procedural posture

Appellant creditor contended that a payment it made to a bankruptcy trustee was a repayment of funds embezzled by the appellee debtor, the creditor's former controller and chief financial officer, and thus a nondischargeable claim. The U.S. Bankruptcy Appellate Panel of the Ninth Circuit held that 11 U.S.C.S. § 502(h) only allowed the creditor to bring a claim against the bankruptcy estate and not against the debtor. The creditor appealed.

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Court :
Judge or Jurisdiction information not available
Consumer opinion summary, case decided on November 17, 2008 , LexisNexis #1208-135