U.S. Court of Appeals for the Second Circuit
Documented Financial Affairs — Barring Discharge
Berger & Assocs. Attorneys, PC v. Kran
Judges Straub, Sack and Lohier
Background: The plaintiffs commenced an action against the debtor and his law partner to recoup fees owed under a referral agreement between the parties. The debtor and his partner were sanctioned for discovery violations and the parties eventually settled. The debtor filed for bankruptcy thereafter. The plaintiffs argued that the debtor’s deficient record-keeping which led to the sanctions barred the debtor’s discharge. The plaintiffs appealed from the grant of summary judgment to the debtor.
Ruling: The Second Circuit affirmed. The court held that the financial affairs which a debtor must adequately document are his circumstances during the pendency of the bankruptcy proceeding and those obtaining for a reasonable period prior to the filing of the petition. The plaintiffs failed to demonstrate that the case fell within the scope of the appropriate section of the Bankruptcy Law.
Ronald Cohen for the plaintiffs-appellants; Bruce L. Weiner of Rosenberg Musso & Weiner for the defendant-appellee