- Case Type:
- Case Status:
- BAP Nos. HI-18-1302-TaSKu (9th Circuit, Aug 07,2019) Not Published
- BAP for 9th Circuit affirmed bankruptcy court (D. Haw.) judgment of nondischargeability of contempt, fraud, and conversion. Evidence was clear and convincing that Debtors knew about preliminary injunction requiring cooperation in turnover of collateral. Lack of evidence of obstruction did not override evidence that Debtors failed to cooperate in accordance with order. Debtors failed to dispute determination of damages for contempt. Trial court discounting of Debtors' testimony based on credibility not error.
- Procedural context:
- Bankruptcy court (D. Haw.) entered judgment of nondischargeability of contempt, fraud, and conversion. Debtors appealed to BAP for 9th Circuit.
- Husband and wife (Batemans; Trent and Lisa) and their daughter "Decker" operated Mountain Thunder and Naturescape (collectively, “Borrowers”). Borrowers purchased coffee from growers, processed it, and sold it at wholesale and retail. In 2011, Borrowers entered into a lending agreement (the “Agreement”) with GemCap and obtained a $440,000 term loan and a $1,550,000 revolving line of credit. They provided a first priority lien on all assets to secure their repayment obligations. The Agreement required Borrowers to deposit collections in a lockbox account. Borrowers verified corporate representations. The Agreement was amended in 2013, reducing the term loan amount to $327,775.77 but increasing the line of credit to $2,550,000. The Batemans and Ms. Decker guaranteed the loans. Borrowers’ ability to draw on the line of credit was limited by the amount of their eligible accounts and inventory. Thus, in connection with each draw, GemCap required submission of a borrowing base certificate that identified the asset basis for borrowing and was certified by a responsible officer. Mr. or Ms. Bateman signed most of the borrowing base certificates. Borrowers were also required to provide monthly certificates listing all equipment in their possession. They delivered many; Mr. or Ms. Bateman signed all of them. Borrowers defaulted in 2015. Borrowers had diverted $771,669 from the lockbox account; GemCap never received these proceeds. Second, Borrowers had provided inflated borrowing base certificates that overstated receivables for years. Batemans filed bankruptcy. GemCap obtained order for turnover of collateral. Batemans obstructed collateral. GemCap sued to except claims from dischargeability. Bankruptcy court entered judgment under 523(a)(2) and 523(a)(6) for more than $2.8M.
- Taylor, Spraker, Kurtz
Joseph Hill v. Raquel King
Summarizing by J Newman
3046 in the system
1 Being Processed