Judgement Factors L.L.C. v. Packer (In the Matter of: Packer)
- Summarized by J. Newman , Newman & Newman
- 8 years 10 months ago
- Citation:
- In Re Athol Packer, Judgement Factors, LLC Appellant v. Athol Packer, Appellee No.15-40826 March 10, 2016
- Tag(s):
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- Ruling:
- Fifth Circuit Affirmed District Court which upheld the bankruptcy court granting summary judgment to Packer, holding that he did not act in any way that merited the denial of a discharge under § 727(a) and dismissing alter ego claims. Judgment Factors failed to obtain leave from the bankruptcy court to purse alter ego and reverse veil piercing claims on behalf of the estate, so it may not pursue these claims. As to the denial of a discharge under § 727(a), Judgment Factors failed to establish that Packer concealed or transferred any assets, destroyed or failed to keep financial records, or made any false oaths.
- Procedural context:
- Following the bankruptcy court’s grant of summary judgment to Packer, Judgment Factors filed a motion for reconsideration, which the bankruptcy court denied. Judgment Factors appealed the bankruptcy court’s decision to the district court. The district court affirmed the judgment of the bankruptcy court on May 14, 2015, agreeing with the bankruptcy court’s conclusions and reasoning. Judgment Factors timely appealed to the Fifth Circuit.
- Facts:
- In the mid-2000s, Defendant–Appellee Athol W. Packer formed Parthenon Development Partners, L.L.C., with Henry Allen and David Allen (the “Allen Partners”) to develop residential property in Prosper, Texas. The LLC and its three members borrowed approximately $4 million from Washington Federal Savings & Loan Association (the “Bank”) to finance the residential development. Packer and the Allen Partners guaranteed the bank note. When the development project proved unsuccessful, the Bank foreclosed on the real property, filed suit against Packer and the Allen Partners, and obtained a deficiency judgment of approximately $5.9 million.
In November 2009, the spouses of the Allen Partners formed Plaintiff– Appellant Judgment Factors, L.L.C. Judgment Factors then acquired the judgment against Packer and the Allen Partners from the Bank. After Judgement Factors attempted to collect the judgment solely against Packer, he filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on May 22, 2013. On August 13, 2013, Judgement Factors filed an adversary proceeding to prevent the entry of a Chapter 7 discharge order for the benefit of Packer, objecting to the discharge under 11 U.S.C. § 727(a)(2)(A), (a)(3), (a)(4)(A), and (a)(5). At the time he filed for bankruptcy, Packer owned a number of business entities. In Count V of its complaint, Judgment Factors requested a determination that these entities were Packer’s “alter egos” and that the “corporate veils” of these entities be “reverse pierced.” Specifically, Judgment Factors argued that Packer should have listed the assets of these other entities in his bankruptcy schedules (because these entities were his “alter egos”) and that the bankruptcy court should determine that these assets were subject to the claims of Packer’s creditors. Following discovery, Packer filed a motion for summary judgment on August 8, 2014.
- Judge(s):
- King, Jolly, and Prado for 5th Circuit
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