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Joseph Hill v. Raquel King

Summarizing by J Newman

Home Service Oil Company v. Cecil (In re Cecil)

Home Service Oil Company v. Cecil (In re Cecil), No. 15-6026 (BAP 8th Cir. Dec. 28, 2015)
The BAP for the 8th Circuit affirmed the ruling of the bankruptcy court (E.D. Mo.) in denying the discharge of a chapter 7 debtor based on the individual's failure to disclose a number of assets and prepetition transfers. Notwithstanding that the undisclosed assets and transfers would not have resulted in any distribution to creditors, the BAP agreed that the debtor's cumulative failure to list multiple bank accounts, assets held in the name of third parties, income for her and her non-filing spouse, and transfers constituted "reckless indifference to the truth" of the debtor's statement of financial affairs and schedules, and satisfied the requisite intent to establish that the debtor "knowingly and fraudulently . . . made a false oath or account" under 727(a)(4)(A). The BAP agreed that the bankruptcy court properly rejected the debtor's arguments that her "sloppiness," and lack of understanding of the reporting requirements, were justifications for the omissions.
Procedural context:
Creditor filed adversary action for denial of debtor's discharge under 727(a)(2) and (a)(4). Following trial, the bankruptcy court entered judgment denying discharge. Debtor/defendant appealed to BAP for 8th Circuit.
Sixty-nine year old debtor filed chapter 7. Debtor was high school graduate, with some college course education. Debtor operated convenience store, and salvaged auto sale business, handling bookkeeping duties, as well as bookkeeping duties for other auto auction business, as well as several civic organizations. Debtor also personally competed her own income taxes. Debtor, through counsel, filed individual chapter 7 case. Non-filing spouse had terminal cancer, and died postpetition. Debtor approved initial schedules with numerous omissions, including on Schedule B, checking "none" for checking accounts despite fact that she owned or had signatory power on as many as twelve bank accounts. Debtor also failed to disclose jewelry, firearms, her interest in salvage auto business or its assets, or security interest in vehicle owned by grandson. Debtor also failed to list non-filing spouse's income on Schedule I, or Form B22A, instead listing "none." On SOFA, debtor listed no income within two years of filing. Debtor also listed "none" for financial accounts closed within a year of filing, despite having six such accounts. Debtor also checked "none" for payments of $600 made to creditors within 90 days of bankruptcy, notwithstanding $23k payment made in cash from home safe used to pay off mortgage in 90 days before bankruptcy. Debtor also failed to disclose transfer of GMC Hummer H2 to daughter's boyfriend within two years of filing. Debtor also failed to disclose bank accounts held or controlled for third parties. Following questioning at meeting of creditors, debtor did disclose many of the omitted items. However, debtor failed to file amended schedules until the day before the 727 trial because of an error by attorney. None of omitted items, once disclosed, resulted in availability of assets for distribution to creditors. Following trial on creditor's 727 claims, the bankruptcy court entered judgment against debtor denying discharge.
Federman, Saladino, Shodeen

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