Pending Lawsuit, Defendant Filed Chapter 7
My question involves bankruptcy in the state of: ND
Hello,
I currently have a pending lawsuit against a former business partner. The business failed, due mostly to the fact that Defendant/former partner embezzled large amounts of money from the business.
I filed my Complaint and was advised that Defendant was considering filing for Chapter 7. The Complaint primarily focuses on embezzlement and conversion. Now, Defendant has petitioned the Court for Chapter 7 protection.
Will the automatic stay preclude my claims or, since my Complaint was filed before his filing for bankruptcy, will I be able to get the automatic stay lifted. Again, the case involves fraud/embezzlement and so I believe/hope this is different than some other suit which would be barred by the automatic stay.
Re: Pending Lawsuit, Defendant Filed Chapter 7
Is there a criminal action pending against him?
Re: Pending Lawsuit, Defendant Filed Chapter 7
Quote:
Quoting
Dogmatique
Is there a criminal action pending against him?
Not currently. I have simply brought the civil action at this point.
Re: Pending Lawsuit, Defendant Filed Chapter 7
You need to file a motion with the Trustee requesting the stay be lifted. This may or may not be granted.
Regardless, you'll also need to attend the 341 creditors meeting and state your reasons why this debt should not be discharged, and take everything you have regarding the embezzlement allegation/suit.
I must ask though - why haven't you filed a criminal complaint? That would certainly give you a better chance....
Re: Pending Lawsuit, Defendant Filed Chapter 7
I'm not interested in any criminal proceedings, I simply wish to get back the money owed to me by Defendant, however unlikely that is.
More background: We were co-guarantors on a loan which I have paid in full, so I originally went after him seeking contribution. Upon learning of his intent to file for Chapter 7, the complaint was amended to include embezzlement, breach of fiduciary duty, and conversion. If not for Defendant filing for BK, this would be a slam dunk win for me.
341 meeting is upcoming.
Re: Pending Lawsuit, Defendant Filed Chapter 7
Actually, you're going to want to file a complaint against the defendant in bankruptcy court to get the debt deemed nondischargeable.
The Code section is 11 USC 523(2), which excepts from discharge those debts
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive.
A motion to lift the stay won't change the dischargeability of the debt, it will merely allow you to go back to state court. And that will be a waste if the debt is discharged in the bankruptcy - which will happen unless you file that action I mentioned above.