Despite Plaintiff’s allegations regarding the Debtor’s own divorce and corresponding sizeable settlement that Debtor allegedly failed to explain, the Court found that Ms. Davis’ testimony on this issue sufficient to meet her burden to explain satisfactorily the disposition of such assets over the past many years.Plaintiff’s Complaint sought to liquidate all claims against the Debtor, as well seek a determination that the Debtor: (1) was not entitled to a discharge under 11 U.S.C. §727(a)(3) and (a)(5); and (2) was not entitled to a discharge of Plaintiff’s liquidated claims under 11 U.S.C. §523(a)(2) and (a)(4).Count One: NegligenceCount One of Plaintiff’s Complaint asserted a cause of action against the Debtor for negligence.

idating Corporations and PartnershipsSection 1141(d)(1) of the Bankruptcy Code provides that, except as otherwise provided in section 1141(d), a chapter 11 plan, or a plan confirmation order, the confirmation of a chapter 11 plan by the bankruptcy court discharges the debtor from any claim or debt that arose before the confirmation date, including claims arising from the rejection of executory contracts or unexpired leases, certain claims arising from the recovery of property by the estate, and certain tax claims. See 11 U.S.C. § 1141(d)(1). However, pursuant to section 1141(d)(3), the confirmation of a chapter 11 plan does not discharge a debtor if: the plan provides for the liquidation of all or substantially all of the property of the estate; the debtor does not engage in business after consummation of the plan; andthe debtor would be denied a discharge under section 727(a) … if the case were a case under chapter 7 of [the Bankruptcy Code]. 11 U.S.C. § 1141(d)(3) (emphasis added). Section 727(a)(1) of the Bankruptcy Code provides that "[t]he court shall grant the debtor a discharge [in a chapter 7 case], unless … the debtor is not an individual." The term "individual" is not defined by the Bankruptcy Code. However, it has been construed to include only "natural persons," as distinguished from corporations, partnerships, and other entities. See, e.g., Friedman v. C.I.R., 216 F.3d 537, 548 n.7 (6th Cir. 2000) (a corporate debtor is not an individual entitled to a chapter 7 discharge); Yamaha Motor Corporation v. Shadco, Inc., 762 F.2d 668, 670 (8th Cir. 1985) ("Congress clearly did not intend the term 'corporate debtor' to be used interchangeably with the term 'individual debtor,' as such a construction would render meaningless employment by Congress of the term 'individual.'" (citations and internal quotation marks omitted)); Consolidated Rail Corp. v. Gallatin State Bank, 173 B.R. 146, 147 (N.D. Ill 1992) ("Although the Bankruptcy Code nowhere explicitly defines the word 'individual' it leaves no doub

Although it is fair to say the Supreme Court held that a fraudulent transfer could be an example of “actual fraud,” it remains to be seen what type fact patterns will be found to satisfy the “obtained by” requirement, the parameters of which Husky left uncertain. ¹ The dissent (and the Fifth Circuit) also pointed out that another provision of the Bankruptcy Code, to wit, 11 U.S.C. §727(a)(2), already excepts from discharge actual (as opposed to constructive) fraudulent transfers that occur within one year of the bankruptcy filing. See id.

On June 6, 2014, the United States District Court for the District of Connecticut affirmed the Bankruptcy Court’s (Weil, J.) decision overruling a pro se creditor’s objections to the debtor’s discharge under 11 U.S.C. §727(a)(2)(A), (a)(3) and (a)(4)(A). A pro se creditor, Mr. Holmes, and the debtor, Mr. Portaluppi, were housemates for some period of time prior to 2007.

A debtor cannot obtain a discharge in a Chapter 7 bankruptcy within eight (8) years of being discharged in a prior Chapter 7 or Chapter 11 action. 11 U.S.C. § 727(a)(8). If the prior bankruptcy was a Chapter 13, the waiting period for receiving a Chapter 7 discharge is six (6) years, unless 100% of the unsecured claim amounts were paid or 70% of the unsecured claim amounts were paid and the plan was proposed in good faith.

hat the plaintiff had failed to cite a single case of a court “exercising its civil contempt authority on behalf of another court’s injunction.” While the plaintiff argued that a bankruptcy court’s discharge “injunction” is normally a simple form using brief and boilerplate language and enforces a statutory and not judge-crafted injunction, the court rejected this argument as it previously had in similar decisions. Thus, the general rule that a class action for violation of the discharge injunction may be maintained in a single federal district in certain circumstances but not nationwide still appears to hold.Bruce will likely not be the end of litigation on the issue of nationwide class certification in bankruptcy courts for violation of the discharge injunction. First, only two circuits (the Second and the Fifth) now have held that a nationwide class may not be maintained. Second, the reasoning in Bruce that a form discharge order using brief boilerplate language (“A discharge under 11 U.S.C. § 727 is granted to [the debtor]”) that enforces a federal statutory injunction is somehow unique to the bankruptcy judge entering it may not win the day in other courts. Indeed, the First Circuit already has held in a somewhat related context that the rule that the judge issuing the injunction is the only judge who can properly interpret and enforce it does not apply in the bankruptcy discharge injunction context. In short, defendants may need to focus less on this point and more on others in order to defeat attempts at nationwide class actions for violations of the bankruptcy discharge injunction.

The discharge provided in bankruptcy is fundamental, allowing the “honest but unfortunate” debtor a fresh start. There are various exceptions to the discharge found in Sections 523 and 727 of the Bankruptcy Code—designed to prevent the discharge of debts incurred as the result of dishonest acts—such as false pretenses or actual fraud. 11 U.S.C. §523(a)(2)(A) specifically exempts a debtor from discharging debts of money, property, services, or an extension, renewal of financing of credit, if such debts were obtained by “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.”In a decision handed down on February 22, 2023, Bartenwerfer v. Buckley, the United States Supreme Court ruled that the bankruptcy process cannot be used to discharge debts incurred through fraud, even when the debtor was not the individual that defrauded creditors. The decision was authored by Justice Amy Coney Barrett, with a concurring opinion by Justice Sonia Sotomayor who was joined by Justice Ketanji Brown Jackson.The facts in Bartenwerfer were fairly straightforward. In 2005, Kate Bartenwerfer and her then-boyfriend David Bartenwer

me as good news for trade vendors, landlords and others, the District Court held that, under the specific facts, post-petition liabilities arising under a pre-petition guaranty were not discharged by the guarantor’s bankruptcy.The dispute at issue in the Schlundt Decision focused on the following facts: in 2003, David Schlundt’s restaurant signed a food supply agreement with a vendor, which Schlundt personally guaranteed. Years later, Schlundt filed a personal Chapter 7 bankruptcy, and in 2014, received a personal discharge (the restaurant did not file).Personal bankruptcy notwithstanding, the vendor continued to ship to the restaurant, which closed in 2018. At the time of closing, the restaurant owed the vendor $36,839.62 for food and other services delivered in 2018.The question for the courts was whether the bankruptcy discharge – granted in 2014 – discharged debts incurred in 2018 under a guaranty executed in 2003.In the Schlundt Decision, the District Court began with the text of 11 U.S.C. § 727(b), which prescribes the scope of bankruptcy discharge.The Court reasoned that the discharge precludes the enforcement of “debts,” not promises, and that the “debt” did not arise until the goods and services were delivered to the restaurant.Focusing on the “conduct test,” the District Court held that, because the conduct giving rise to the claim (as opposed to the promise) arose post-petition, these 2018 debts against Schlundt were not discharged, even though they were under a pre-petition guaranty.Bolstering the decision was the District Court’s citation of authority noting that guaranties are continuing promises to guarantee ongoing debts as they arise, with each future obligation constituting a separate and distinct transaction.The District Court reconciled the Schlundt Decision with the Seventh Circuit’s decision in Saint Catherine Hospital of Indiana, LLC v. Indiana Family and Social Services Administration, 800 F.3d 312(7th Cir. 2015).At issue there was an assessment calculated and

First, 11 U.S.C. § 523 enumerates debts that are not dischargeable. A non-exhaustive list of such claims include:(1) certain tax claims;(2) money, property, services, or an extension, renewal, or refinancing of credit to the extent obtained by false pretenses, a false representation, or actual fraud;(3) fraud or defalcation by a debtor who is a fiduciary;(4) domestic support obligations and other debts arising from divorce or separation proceedings;(5) willful and malicious injury to an entity or that entity’s property;(6) certain fines, penalties, and forfeitures payable to and for the benefit of a governmental unit; and(7) violations of Federal or State securities laws.Second and third, pursuant to 11 U.S.C. §§ 727 and 1141, the Bankruptcy Court may approve a written waiver of all debts that the debtor executes after filing for a Chapter 7 or Chapter 11 bankruptcy.Fourth, pursuant to 11 U.S.C. 524, the Bankruptcy Court may approve a written reaffirmation agreement by which a debtor agrees, after filing bankruptcy, to repay a specific debt if the debtor meets a lengthy set of criteria found in that section.

In Crocker, the plaintiffs obtained private student loans that ultimately ended up being serviced by Navient. The plaintiffs—Evan Brian Crocker in Texas and Michael Shahbazi in Virginia—later filed voluntary Chapter 7 bankruptcies in their respective states and received discharges under 11 U.S.C § 727. Navient attempted to continue collecting on the unpaid student loans after Crocker and Shahbazi received their discharges in 2016 and 2011, respectively.In August 2016, Crocker filed an adversary proceeding against Navient in the Bankruptcy Court for the Southern District of Texas (herein “the Bankruptcy Court”), the same court that granted Crocker the discharge.