Court Rules Chapter 7 Bankruptcy Trustee Able to Dodge the Underlying Statute of Limitations
Under certain circumstances, a Chapter 7 Trustee has power to skirt the underlying statute of limitations when stepping into the shoes of plaintiff to pursue assets of the bankruptcy estate.
Chapter 7 Trustee Substitues in as Plaintiff in a Case of First ImpressionA Chapter 7 trustee in Pennsylvania can be substituted as plaintiff in an action after the expiration of the applicable statute of limitations, the Pennsylvania Supreme Court held May 25 ( Morrison Informatics, Inc. v. Members 1st Fed. Credit Union, 2016 BL 166363, Pa., No. 18 MAP 2015, 5/25/16 ). The court noted that the issue was one of first impression in the commonwealth and said public policy favored allowing the substitution if the trustee acted in a "reasonably diligent fashion" and without undue prejudice to the defendant. Chief Justice Thomas Saylor wrote for the majority and remanded the case to determine whether the trustee will ultimately be allowed to pursue the underlying action for damages. Justice David Wecht filed a separate opinion concurring in the result but advocating for what he argued should be a more flexible rule. A summary of the opinion can be viewed at http://www.bna.com/bankruptcy-trustee-given-n57982073708/.
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