Bandi v. Becnel (In re Bandi)

Summarized by Gregory Hesse , Hunton Andrews Kurth LLP
13 years 8 months ago

Citation:

Bandi v. Becnel (In re Bandi), Case No. 11-30654 (5th Cir., June 12, 2012)

Tag(s):

Ruling:

The Fifth Circuit affirmed the decisions of the United States District Court and the United States Bankruptcy Court for the Eastern District of Louisiana denying the dischargeability of a debt pursuant to 11 U.S.C. Sec. 523(a)(2)(A) and (a)(2)(B). The primary issue was whether the debtors representations to the creditor that they owned certain real property and business, when in fact they didn't, were "statement[s] respecting the debtor's . . . financial condition." Pursuant to Sec. 523(a)(2)(A), a debt for money can be excepted from discharge to the extent it is obtained by false pretenses, a false representation or actual fraud, other than a statement repsecting the debtor's or an insider's financial condition." The court concluded that the debtors statements were not "statements respecting their financial condition" within the meanding of Sec. 523(a)(2)(A). Another issue addressed arose under Sec. 523(a)(2)(B) and was whether the statements made by the debtors were false and the creditor reasonably relied on the statements. The court noted that these issues are findings of fact that are reviewed for clear error. The court concluded that there was not clear error made by the Bankruptcy Court in finding that the statements were false and that the creditor reasonably relied upon the statements.

Procedural context:

This is an appeal of a judgment denying the dischargeability of a debt after a trial on the merits.

Facts:

Christopher Becnel (the "Creditor") lent $150,000 in cash to RSB Companies ("RSB"), which loan was guaranteed by Charles Bandi ("Charles") and his brother, Stephen Bandi ("Stephen", and collectively with Charles, the "Guarantors"). The Guarantors both represented to the Creditor that they owned certain property and businesses when in fact they did not. The Creditor made the loan to RSB in reliance upon the guarantees and the representations made by the Guarantors about the property that they owned. Ultimately, RSB did not repay the loan and filed for bankruptcy. Subsequently, Stephen and Charles each filed for bankruptcy. The Creditor objected to the dischargeability of the guaranty debt in both Stephen's and Charles' bankruptcy cases.

Judge(s):

Reavley, Prado and Owen.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!