Denial of Discharge and Sanctions

A Roanoke District Court affirmed a Bankruptcy Court’s denial of a Chapter 7 discharge and the award of sanctions to the creditor.  The case was Brown v. Presidential Financial Corp.

In Brown the debtor left the state of Georgia knowing that a collection action was pending against him.  He sold his Georgia residence and paid creditors with the sales proceeds, excluding the creditor in this case.  In Virginia the debtor filed a Chapter 7 bankruptcy petition within eight days.  The creditor filed an objection to discharge under Bankruptcy Code §727(a)(2)(A), alleging that the debtor intended to hinder, delay or defraud the creditor.

The District Court, upon the debtor’s stipulation of the facts, determined that the evidence was sufficient for the Bankruptcy Court to rule in favor of the creditor and deny the discharge.

The District Court also upheld the Bankruptcy Court’s award of sanctions against the debtor; the Bankruptcy Court awarded the creditor its attorney’s fees and costs.  The Bankruptcy Court had found that the debtor repeatedly failed to comply with the creditor’s multiple motions to compel discovery, as well as the Court’s orders to turn over the requested materials.