Justices Pass on Banks’ Bid to Arbitrate Debt Discharge Claims

The U.S. Supreme Court declined to hear a challenge over banks’ right to compel arbitration of claims that they violated the bankruptcy code by seeking to collect discharged credit card debts.

The justices’ March 8 decision not to take the case leaves intact a June 2020 appeals court ruling that GE Capital Retail Bank—now Synchrony Bank—Citibank NA, and Citigroup Inc. couldn’t rely on the Federal Arbitration Act to require two Chapter 7 debtors to arbitrate their proposed class action.

The U.S. Court of Appeals for the Second Circuit wrongly concluded that an inherent conflict between the FAA and the bankruptcy ...