CaptureFebruary 26, 2015

A CEO of a bank owed the bank more than $11 million.   Just before his anticipated filing of Chapter 7 bankruptcy, he transferred most of his assets to his wife.

The Bank objected to their ex-CEO’s discharge claiming he failed to disclose pre-petition assets to the Court.

The Debtor admitted he made the transfers but denied he made them with fraudulent intent but as a “strategy”.   The Debtor tried to amend his bankruptcy petition but his controlled release of information when it suited his needs is not in accordance with Bankruptcy Code.

After a six-day trial, the Bankruptcy court found the debtor’s conduct to both knowing and fraudulent.    Amendments and disclosure of this kind plainly cannot cure deliberate omissions.

Naturally, the Debtor’s discharge was denied and he had to pay back his employer – the bank.

I always remind my client’s truthfulness is absolutely necessary and you cannot have a “strategy” when disclosing your assets.    If an experienced bankruptcy attorney had pointed this out to their client (if the client disclosed the claim), this could have been avoided.

Forgetting assets transfers is not a good strategy.

There are many implications and ramifications when you file for Bankruptcy.   You should examine the legal representation you choose and always, always be truthful.