Kaler v. Bala

Appellant appealed the Bankruptcy Appellate Panel's (BAP) judgment holding that the bankruptcy estate of her former employer, Racing Services, was entitled to the liquidation proceeds of a cash-value life insurance policy the employer purchased for her. Because the trustee had presented no evidence demonstrating that appellant could have demonstrated insurability, the court rejected the argument that the purported "equities" of this case required that the court deem appellant's failure to reinstate the policy as an act of surrender. The terms of the agreement between appellant and Racing Services granted Racing Services only the limited right to receive a repayment of policy premiums from the cash value upon surrender of the policy. Accordingly, the court reversed where appellant at no time surrendered the policy and the estate did not possess a right to control the policy or receive its liquidation proceeds. View "Kaler v. Bala" on Justia Law