Husky International Electronics, Inc. v. Ritz, Jr. (In the Matter of Ritz, Jr.)

Citation:
--- F. 3d ---, No. 14–20526 (5th Cir. May 22, 2015)
Tag(s):
Ruling:
A creditor seeking to except its claim from discharge under Section 523(a)(2)(A)'s "actual fraud" provision must show that the debtor made a false representation to that creditor in connection with the debt owed. Without a false representation, there is no "actual fraud."
Procedural context:
Creditor appealed bankruptcy court's judgment denying all relief requested after the trial of an adversary proceeding initiated by creditor to object to the individual debtor's chapter 7 discharge. The district court affirmed the bankruptcy court's decision, and this appeal followed.
Facts:
Creditor was owed $164K for goods delivered to Chrysalis Manufacturing Corp. Debtor was a director and a 30% owner of Chrysalis. Between November 2006 and May 2007, Debtor transferred over $1 million of Chrysalis' funds to other entities that he owned, in whole or in part. In May 2009, Creditor sued Debtor in an effort to hold him personally liable for the debt owed by Chrysalis. Debtor filed a voluntary chapter 7 petition in December 2009. Several months later, Chrysalis initiated an adversary proceeding objecting to the discharge of Debtor's alleged debt to Chrysalis under 11 USC 523(a)(2)(A), (4), and (6).
Judge(s):
Stewart, King, Elrod

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