Case Summary:
Former business partner sued the debtors, contending that his judgment against the debtors was nondischargeable under §§ 523(a)(4) and (a)(6).  Creditor also claimed the debtors’ discharge should be denied for alleged misrepresentations and other activities related to valuation of their assets, primarily their stock interest in a company which the debtors valued at “$0" in their schedules.  The court found that the debtors’ use of a “liquidation value” rather than a “going concern” value was appropriate under the circumstances, and as a result there was no basis to deny the debtors’ discharge under § 727(a).  Likewise, the court concluded that there was no “fiduciary capacity” between the parties under § 523(a)(4).  However, the state court jury did find that the debtor acted in a manner which qualified as “willful and malicious” conduct under § 523(a)(6), and the debt was excepted from discharge on that basis.

Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
11 U.S.C. § 727 -- Discharge

Key Words:
Discharge
Fraud – Fiduciary Capacity
Willful and Malicious