Hussain v. Malik (In re Hussain)
- Citation:
- BAP No. CC-13-1465-TaDKi (B.A.P. 9th Cir. Apr. 15, 2014)
- Tag(s):
-
- Ruling:
- Affirming the bankruptcy court, the Bankruptcy Panel of the Ninth Circuit held that the bankruptcy court did not commit error in denying the debtor's discharge under section 727(a)(3) of the Bankruptcy Code. First, the panel held that the Maliks were creditors of the debtor and, thus, were authorized to object to his chapter 7 discharge. The Maliks held a claim against the debtor, which sufficiently conferred creditor status for purposes of section 727(c)(1)'s standing requirement. Second, the panel held that the Maliks established a prima facie case under section 727(a)(3), because the record showed that the debtor's records were inadequate as income tax returns, with nothing more, failed to reasonably present the debtor's financial condition and business transactions relating to a gas station. The debtor failed to justify the inadequacy or non-existence of the debtor's business records by simply stating that he turned over all financial information to his accountant.
- Procedural context:
- Appeal from bankruptcy court's judgment denying the debtor a chapter 7 discharge under section 727(a)(3) of the Bankruptcy Code.
- Facts:
- The debtor's creditors, the Maliks, invested $62,500 in a venture for the purchase of a gas station. Subsequently, the Maliks invested an additional $100,000. The Maliks were lead to believe that the investment would result in their holding a 25% interest in a four-person partnership, SJPJ Partners, which would own and operate the gas station. In fact, the debtor purchased the gas station and became the sole owner of the gas station. When the Maliks demanded a return of their $162,500 investment, the debtor issued two checks; both checks, however, were returned for insufficient funds.
The debtor filed a chapter 7 bankruptcy case. The Maliks objected to the debtor's discharge under section 727(a)(3). The bankruptcy court found that the debtor failed to maintain adequate records or to justify his failure to do so and ruled in favor of the Maliks on the section 727(a)(3) claim. A judgment was entered in favor of the Maliks on the section 727(a)(3) claim.
- Judge(s):
- TAYLOR, DUNN, and KIRSCHER
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
