Fourth Circuit holds Bankruptcy Code's anti-discrimination provision does not apply to home loan guaranty entitlements

In AYES v. U. S. DEP'T OF VETERANS AFFAIRS, Ayes and others filed a class action complaint against the VA, alleging that the VA violated 11 U.S.C.A. 525, the anti-discrimination provisionof thee Bankruptcy Code, by refusing to fully restore veteran home-loan guaranty entitlements to the class solely because of their previous discharges in bankruptcy. The district court granted the VA's motion to dismiss and the Fourth Circuit affirmed.

The panel held that Section 525(a) prohibits a governmental unit from denying a "license, permit, charter, franchise, or other similar grant"solely because an individual has filed for or received a discharge in bankruptcy, but that the veteran guaranty entitlement was not a "license," "permit," "charter,"or "franchise."