During a bankruptcy case, watches worth over $400K are lost? All assets must be listed when you file a bankruptcy case.
- Debtors (both surgeons) filed for Chapter 7
- $5.6 million in Debt
- $400K in assets which included jewelry they valued at less than $15K
- Chapter 7 Trustee noted a potential fraudulent transfer wherein the Debtor returned about 20-30 valuable watches.
- The Debtors could not and did not keep accurate records of these watches.
- Debtors would get watches from a jeweler and keep the ones they wanted and return the rest. However, the receipts and returns did not match at all.
- The jeweler filed a Proof of Claim https://www.uscourts.gov/forms/bankruptcy-forms/proof-claim-0 for approximately $414K for watches that the Jeweler delivered to the Chapter 7 Debtors but were not returned.
- The surgeon Debtors claimed that just did not keep good records.
- Trustee filed an adversary proceeding and the matter progressed to the appellant court.
- The lack of receipts and returns were questionable at best. The missing watches were neither found nor could be located in any paperwork indicating these watches were returned.
- The U.S. Court of Appeals agreed with both lower courts and the Chapter 7 Discharge for the surgeons were denied.