9th Cir BAP Vacates and Remands Denial of Discharge back to BK Court to Make Specific Findings of Fact - 9th Cir. BAP - Unpublished 2014

It appears that the Court may have had a bad debtor on its hands and was frustrated with the actions taken by the debtor.  As a result, after a trial on the case, the Court denied the debtor a discharge under 727(a)(5), 727(a)(2) and 727(a)(4)(A).  The problem was that the Court did not make specific findings on the elements of the cause of action. 




727(a)(2) - the Court never determined that the assets that were concealed were property of the Estate.  The Debtor argued that the property belonged to a corporation.


727(a)(5) - Same Issue, the failure to explain the disposition of the assets....the question was were they property of the estate or the corporation.


727(a)(4)(A) - The Court needed to make a determination as to whether the debtor knowingly and fraudulently made a false oath (clearly the statement was false...but knowingly and fraudulently but more importantly the false oath pertained to a prior bankruptcy case and such false statement in the prior case were not actionable in the new case...citing to In re Carter, 125 B.R. 631, 634 (Bankr. D. Utah 1991)?)




In essence, the Court needed to make specific findings to support the denial of the discharge.  I'd suggest that the BK Court will make such findings the second time around.


In re Sethi - 2014 - 9th Cir. BAP

In a Published Decision, the 9th Circuit affirmed the determination that a fraud which would have served as grounds to deny a discharge could serve as grounds for the revocation of a discharge

The 9th Circuit affirmed the district court’ judgment, the panel held that a fraud that would have served as grounds for denying a chapter 7 bankruptcy discharge if it had been known at the time of the discharge could serve as grounds for the later revocation of that discharge.

The United States Trustee moved to revoke the discharge pursuant to 11 U.S.C. §727(d)(1), which provides that a chapter 7 discharge may be revoked if it was obtained through the fraud of the debtor and the requesting party did not know of the fraud until after the granting of the discharge.  The bankruptcy court found that the debtor’ misrepresentations of the value or existence of a number of assets in the schedules he filed and in the testimony he gave during the creditors meeting amounted to a violation of §727(a)(4)(A), which provides that a bankruptcy court should deny discharge if the debtor knowingly or fraudulently, in or in connection with the case, made a false oath or account.  The bankruptcy court granted the Trustee’ motion, and the district court affirmed.

The panel rejected the debtor’ argument that the concealment of his fraud, rather than the fraud itself, procured his discharge.  Adopting the reasoning of the Bankruptcy Appellate Panel and other circuits, the panel held that a material fraud, which would have resulted in the denial of a chapter 7 discharge had it been known at the time of such discharge, can justify subsequent revocation of that discharge under §727(d)(1).

9th Cir. In re Jones - Published