Chantel v. Pierce (In re Chantel)

9th Cir. BAP No. AZ–14-1511 and AZ-14-1514-PaJuKi (July 1, 2015) (unpublished)
The 9th Cir. BAP held that Debtor's Trust was their "alter ego;" that the assets held in Trust were property of the estate that must be turned over to the Chapter 7 Trustee; and that the Debtors' discharge was properly denied for concealment of assets and false oaths under § 727(a)(2)(A), (a)(2)(B), and (a)(4).
Procedural context:
The Chapter 7 Trustee brought a nondischarge action against the Debtors under § 727. The United States Trustee also brought a nondischarge action against the Debtors and also sought a declaration that the Debtors' Trust was a sham and its assets were property of the estate. The adversary proceedings were combined for trial. The Debtors appealed the bankruptcy court judgment in favor of plaintiffs. The BAP affirmed the judgment, with the exception that it overruled the denial of discharge on the grounds of inadequate or withheld records under 727(a)(3) and (a)(4)(D).
Contemporaneous with litigation in which they did not prevail, the Debtors created, and transferred assets to, a Trust, including parcels of real estate, real estate contracts, silver bullion, and jewelry. The Debtor's used the Trust to pay their expenses. The court found that the Trust was a sham and the Debtor's alter ego, and further that they concealed information about the transfers to the Trust on their schedules.
PAPPAS, JURY, and KIRSCHER, Bankruptcy Judges.

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