Bankruptcy Ct. did not err in reopening bankruptcy case of debtor who sought discharge of $499,000 debt owed to creditor and to discharge lien on debtor’s interest in company. Record showed that creditor obtained $499,000 state-court judgment against debtor, who in turned filed for bankruptcy protection. Bankruptcy Ct. thereafter rejected creditor’s claim that instant debt was procured through debtor’s fraud and thus was not dischargeable. Creditor thereafter obtained state-court judgment that found that only debts secured by real property can be avoided. As such, Bankruptcy Ct. had jurisdiction to reopen debtor’s bankruptcy proceeding to address effect of second state-court action and to discharge instant debt. Also, Bankruptcy Court did not err in failing to allow creditor in renewed proceeding to contest debtor’s valuation of interest in business at below $15,000, where creditor failed to contest said valuation in original bankruptcy proceeding.
Federal 7th Circuit Court
Civil Court
Bankruptcy