Harrington v. Simmons (In re Simmons)

No. 15-9005
The Appellate Court upheld the Bankruptcy Court's decision denying the Debtor his discharge on the grounds that the Debtor had not adequately explained the loss of assets before bankruptcy and had not adequately preserved financial records. In determining that the Debtor had not adequately preserved financial records, the Court considered the Debtor's extensive real estate investing experience, extensive investments, college education and extensive borrowing from banks. The Court also dismissed the Debtor's justification defense that he was a dupe for others as unsupported and not objectively reasonable. The Court determined that the Trustee satisfied his burden to show that the Debtor had assets prior to the bankruptcy, which were dissipated and the Debtor did not adequately explain the loss when he provided no coherent record or explanation as to what happened to twenty-two rental properties and accompanying rents.
Procedural context:
Appeal from the First Circuit Bankruptcy Appellate Panel decision affirming the Bankruptcy Court's decision to deny the Debtor a discharge.
Prior to filing for bankruptcy protection under Chapter 7, the Debtor had been a real estate investor who owned twenty-seven properties prior to filing bankruptcy. At the time of the bankruptcy, the Debtor had only five properties left. Despite multiple opportunities and and depositions, the Debtor produced few business and bank records related to the properties. The Trustee sued to deny the debtor a discharge under 11 U.S.C. 727(a)(3) and (a)(5).
Lynch, Souter and Selya

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