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Opinion 473

Case Name: 

Mathai v. Warren (In re Warren)

Judge: 
Judge Boulden
Date: 
Mar-29-2005
Case Number(s): 
04-2671
Status: 

UNPUBLISHED

Body: 

Plaintiff creditors filed a complaint against the Debtors seeking denial of discharge under 11 U.S.C. §727(a)(2)(A) and (4)(A) for the Debtors' conduct prior to filing bankruptcy. In anticipation of filing a chapter 7 petition, the Debtors generated $90,000 in cash by selling many of their assets, some at fire-sale prices. The Debtors then utilized the funds to purchase exempt assets and prepay future living expenses. Upon completion of all the pre-bankruptcy transactions, the Debtors had no realizable assets that could be liquidated to repay their over 6,000 creditors. When the Debtors filed their bankruptcy papers, they did not list some of the sales and expenditures, and only added some of the omitted transactions after they were discovered by the Plaintiffs. The Debtors excused their conduct by describing it as their desperate attempt to provide post-petition food and housing for themselves and their five children, and justified their failure to list the various transactions merely as an unfortunate, unintentional oversight. The Plaintiffs asserted in their complaint that the pre-bankruptcy activity was a calculated scheme by the Debtors to engage in an extraordinary, deliberate, and sustained selling frenzy and spending spree designed to hinder, delay, or defraud their creditors and then hide their actions through a false oath on their bankruptcy papers. The Court was struck by the Debtors' animosity toward the Plaintiffs and determined that the Debtors would do just about anything to prevent their assets from falling into the Plaintiffs' possession. The Debtors abused pre-bankruptcy planning because their purpose was to place assets out of reach of the Plaintiffs. The Court rejected the excuse, under § 727(a)(4)(A), that the Debtors were too busy, did not understand, were forgetful, or simply were inadvertently mistaken in their answers submitted in their Statement of Financial Affairs and Schedules. Instead, the Court concluded that the Debtors attempted to use up all their assets so that the Plaintiffs would receive nothing, and they intended to hide the transactions in their bankruptcy papers. The Court found that the Plaintiffs carried their burden of proof and denied the Debtors' discharge under both §727(a)(2)(A) and (4)(A).

Internal Ref: 
Opinion 473
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