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Joseph Hill v. Raquel King

Summarizing by J Newman

Ereren v. Marshack (In re Ereren)

Citation:
Ereren v. Marshack (In re Ereren), Case No. CC-12-1542-TaDKi (9th Cir. B.A.P. May 28, 2013)
Tag(s):
Ruling:
The Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals (the “Panel”) affirmed the holding of the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”), denying the debtors chapter 7 discharge pursuant to 11 U.S.C. §§ 727(a)(2) and (a)(4). Since the trial did not address the allegations pursuant to 11 U.S.C. § the Panel did not address the issue on appeal. The Panel held that, although the Bankruptcy Court order did not contain an express finding of Mrs. Ereren's intent to hinder, delay, and defraud her creditors, the conclusion that both debtors were denied judgment under § 727(a)(2) was sufficient, and, moreover, the timing and circumstances of the fraudulent transfer to her brother warranted an inference of intent to hinder, delay, or defraud her creditors. Upon an inference of intent to hinder, delay or defraud creditors, whether the transfer is a preference is an irrelevant determination. Despite notifying their counsel, creditors, and the chapter 7 trustee of disposition of certain property, failure to list such disposition of estate property on the Debtors' statement of financial affairs was effectuated with intent to hinder, delay, and defraud creditors. Whether other creditors knew about disposition of the Debtors' property is irrelevant to a determination of discharge pursuant to 11 U.S.C. §727(a)(4)(A).
Procedural context:
Appeal to the Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals from a decision by the United States Bankruptcy Court for the Central District of California denying the debtor's chapter 7 discharge pursuant to 11 U.S.C. §§ 727(a)(2), (a)(4), and (a)(5).
Facts:
In January and March 2010, MGM Grand Hotel, LLC obtained judgments against Mr. Ereren in Nevada and California state courts, relating to an approximately $3 million outstanding gambling debt. Also in March 2010, Mr. Ereren traded-in two Mercedes-Benz vehicles, receiving $59,000 in proceeds. He subsequently leased two new Mercedes-Benz vehicles. In the Summer of 2010, a notice of levy issued by a California County Sheriff, two judgment debtor examinations were conducted by MGM of Mr. Ereren, and an order was entered granting examination of Mrs. Ereren. In July 2010, Mrs. Ereren made two transfers of funds to her brother in Turkey before both she and her husband (the "Debtors") filed a voluntary chapter 7 petition in September 2010. The chapter 7 trustee filed an adversary complaint objecting to discharge under 11 U.S.C. §§ 727(a)(2), (a)(4), and (a)(5), alleging that the Debtors transferred the funds and vehicles with the intent to hinder, delay, and defraud their creditors, they knowingly and fraudulent omitted the transfers from their statement of financial affairs ("SOFA"), and failed to satisfactorily explain the loss or deficiency of assets to meet their liabilities. The Debtors indicated, among other things, the funds transfer was to pay on account of a note executed in favor of Mrs. Ereren's brother, and that they did not know they had to list the vehicles on their SOFA as such trade-in of the vehicles was in the ordinary course of their financial affairs. After trial, the Bankruptcy Court entered a judgment denying the Debtors' discharge pursuant to 11 U.S.C. §§ 727(a)(2), (a)(4), and (a)(5). and, upon the trustee's motion, entered an order, adopting the trustee's proposed findings of fact. Upon entry of the order, the Debtors appealed.
Judge(s):
Taylor, Dunn, and Kirscher, Bankruptcy Judges.

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