Top Ten Supreme Court Cases on Bankruptcy of All Time (And Four Honorable Mentions) Part IV of IV

By M. Jonathan Hayes

Butner v. United States, 440 U.S. 48 (1979)

Issue: When determining the rights of lienholders, should the bankruptcy court look to state law or may it use a “federal rule of equity”?

Holding: State law governs “unless some federal interest requires a different result.”
Justice John Paul Stevens for the unanimous court.

Comment: The dispute here was between a chapter 7 trustee and a lienholder over who had the right to the rent collected on a certain piece of real property. The Supreme Court ignored all of the state law issues . . .

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