Chapter 7 Debt Non-Dischargeable

Chapter 7 Debt

Filing Chapter 7 bankruptcy is not meant for the dishonest debtor. 

As a bankruptcy lawyer, I think I have heard it all when it comes to bankruptcy cases.  However, here is a case I found interesting.   In this case, a debtor tried a slick deal to get out of a debt.

This case entails how owners of a company thought they could sell their company and then try to destroy it.



Chapter 7 Bankruptcy – Sold Company

All 3 principals became employees of the new Company

Within 1 month, all 3 principals did the following:   

1) Left the company and went to work for a competitor,

2) recruited many employees from their former company and

3) revealed trade secrets to the competitor

  • Company B that bought out the original company suffered significant losses and their competitive abilities were severely affected
  • Profits and customers fell dramatically
  • Company B sued the original principals of Company A who went to work for the new company
  • There was a significant favorable ruling and award against the principals
  • One of the original principals of Company A filed Chapter 7 Bankruptcy  https://chapter-7/

Chapter 7  – Court Ruling:

  • The Principal who filed Chapter 7 could not discharge the debt.
  • Debtor was liable on the tortious interference claim and his actions were willful and malicious.
  • Filing Chapter 7 Bankruptcy is not set up for those who deceive others and when they are caught, they want to walk away from the “punishment”.

Honesty is the best policy when filing bankruptcy.   I am a board certified bankruptcy lawyer.  I advise all of my clients that Chapter 7 Bankruptcy is not set up to afford anyone the opportunity to deceive a creditor by willful and malicious acts