Assignment 5 Sample

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Business Law & Bankruptcy
Assignment #5
When Josh was asked, during a bankruptcy proceeding, whether he had ever been sued, he responded that he had not. In fact, he had once been sued for intentional infliction of emotional distress. That suit had been settled many years earlier and had no financial impact on Josh today. Josh’s debts were discharged in bankruptcy. Creditors want the discharge revoked because of Josh’s lie.
Should a discharge be revoked because of a lie made in court by the debtor that had no impact on the case?
In Dale Alleman v. Brett J. Kitson, 341 Fed. Appx. 234 (7 Cir. 2009) Brett J. Kitson and his wife, Courtney, had filed a joint bankruptcy petition in Bankruptcy Court for the Central District of Illinois.
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Mr. Alleman argued that Mr. Kitson failed to retain business records for Kitson Enterprises, a corporation of which Mr. Kitson was the sole shareholder and §727(a)(3) of the Bankruptcy Code prohibits discharge when the debtor has “concealed, destroyed, mutilated, falsified, or failed to keep or preserve” records"from which the debtor's financial condition or business transactions might be ascertained…”.The bankruptcy court found that these records were not material to Mr. Kitson's financial condition because the corporation’s tax returns showed that the business made no profit, the bankruptcy court had determined that Kitson Enterprises had no assets, and Mr. Kitson had earned no money from the corporation. The Court of Appeals, therefore, agreed that the bankruptcy court was correct to conclude that the records were immaterial and discharge was not barred under §727(a)(3).
Mr. Alleman also submitted that the bankruptcy court should not have granted Mr. Kitson a discharge because he had made a number of misstatements and omissions on the bankruptcy statement and schedules, and §727(a)(4) forbids discharge where the debtor "knowingly and fraudulently . . . made a false oath or account." The bankruptcy court found that Mr. Kitson's bankruptcy filing did contain several misstatements and omissions, but concluded that they did not run evoke §727(a)(4) because none of them were material to the bankruptcy
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