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