Chapter 7 Bankruptcy – Lost Assets

Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy?

A chapter 7 bankruptcy case was filed, assets including watches worth over $400K are lost?   All assets must be listed when you file for bankruptcy.   This is an interesting case wherein you will see what happens when Debtors try to hide assets and provide bankruptcy protection. If you have questions, get a bankruptcy consult today!

Chapter 7 Filing for Bankruptcy – Background

  • Debtors (both surgeons) filed for Chapter 7 Bankruptcy
  • $5.6 Million in Debt
  • $400K in assets which included jewelry they valued at less than $15K
  • 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 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. 
  • The Debtors wanted bankruptcy protection.

Bankruptcy Court Ruling

  • The 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.
  • The Chapter 7 Discharge for the surgeons were denied.

I hope these surgeons do a better job documenting their surgeries than their assets.

Chapter 7 Bankruptcy denied result:

  • The watches are still missing
  • Debtors also have all their debts. 
  • The Chapter 7 Trustee has every right to file an adversary proceeding. 

All assets must be listed when you file for bankruptcy.

As a bankruptcy lawyer, I always explain to my clients that Debtors must be completely honest.   When I file debtors’ petitions, we carefully review all aspects of the case.

Contact me for a Free Bankruptcy Consult:    I am here to provide you with bankruptcy protection.

Ralph A. Ferro, Jr., Esq., Board Certified in Consumer Bankruptcy Law by the American Board of Certification