Tag: badges of fraud

Bankr.  M.D.N.C.: In re Young- Denial of DischargeBankr.  M.D.N.C.: In re Young- Denial of Discharge


In their Chapter 7, the Youngs agreed, in a court approved settlement,  to allow the sale of their residence, splitting the net proceeds  equally with the Trustee and were to keep “only those furnishings necessary to furnish their new residence”, with the remainder of their personal property  to be auctioned.  After initially identifying the property they were to retain with the Trustee’s auctioneer, the Young sold all of their additional property with a different auction company, using the funds to pay for moving costs.  It appears that the proceeds from the sale of the personal property amounted to $937.50.  The Trustee and Bankruptcy Administrator then sought denial of the Youngs’ discharge pursuant to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: In re Skubic- No Summary Judgment on Denial of Discharge


In a case involving multiple corporations and transfers back and forth from the Debtors’ household bank accounts and corporate accounts, the Trustee and a major creditor sought a denial of discharge against the debtors under 11 U.S.C. § 727.

After reviewing and finding that the Debtors displayed several of the “badges of fraud”, see West v. Abdelaziz (In re Abdelaziz), 2012 Bankr. LEXIS 591, at *7-8 (Bankr. M.D.N.C. Feb. 1, 2012), the bankruptcy court nonetheless found that the Debtors also displayed several of the mitigating  “badges of a desperate but well-intended debtor”, including:

(1) Evidence showing that the multiple corporations were established for legitimate purposes;
(2) Attempted negotiations prior to bankruptcy with creditors;
(3) Repayment of transfers from corporate accounts, particularly from liquidation of the individual Debtors’ personal property;
(4) Preferential payments were not evidence of an intent to hinder, delay or defraud other creditors;
(5) The Debtors lack of financial sophistication; and
(6) That the Debtors might, even though in one joint bankruptcy as husband and wife, not both share the culpability.… Read More

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Bankr. E.D.N.C.: In re Long – Iqbal/Twombley Pleading for § 727(a)(2)(A)


Creditor, Two Olives, Inc., sought denial of the debtors’ discharge pursuant to 11 U.S.C. § 727(a)(2)(A) , asserting that“the debtor, with intent to hinder, delay, or defraud a creditor . . . has permitted to be transferred . . . property of the debtor, within one year before the date of the filing of the petition.” Prior to the filing of the Chapter 7, the Debtors had allowed three parcels of real property to be sold a t foreclosure- the Ridley property was purchased with a credit bid by the lienholder and the Male Debtor’s mother purchased the McCulloch and Anclote properties for $396,338 and $189,805.65, respectively.… Read More

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Bankr. M.D.N.C.: In re Abdelaziz- Denial of Discharge under 11 U.S.C. § 727(a)(2) for concealment of assets


The Debtor’s corporation filed Chapter 7 and the Debtor agreed to buy the assets of the corporation from the Chapter 7 Trustee for $3,400.00.  The Trustee was later contacted by an auctioneer, who informed the Trustee that the Debtor was attempting to sell additional corporate assets, that had not be listed in the bankruptcy petition filed by the corporation.  The Debtor eventually did sell these non-disclosed assets for $4,000.00 and also filed his own personal Chapter 7 bankruptcy, with the same Trustee being appointed.  The Trustee eventually settled with the Debtor for an additional $2,300.00, but then brought an adversary proceeding to deny the Debtor his discharge pursuant to 11 U.S.C.… Read More

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