Case Conclusion Date: 04.15.1996
Practice Area: Bankruptcy and debt
Outcome: The court awarded the creditor a judgment against the debtor, declared that the creditor's judgment was nondischargeable, and dismissed the debtor's counterclaims.
Description: The debtor filed a voluntary petition for Chapter 7 bankruptcy relief. The creditor filed an adversary proceeding, seeking nondischargability of a claim for certain embezzled funds. The creditor also sought prejudgment and postjudgment interest, accountants' and attorneys' fee, costs, and expenses. The debtor filed a counterclaim for sanctions for a frivolous action, actual and punitive damages for violation of §§ 362, 553, and attorneys' fees and costs. Upon consideration, the court granted a nondischargeable judgment to the creditor, dismissed the debtor's counterclaims, eliminated a portion of the creditor's gallonage liability to the estate, and denied the parties' requests for interest, expenses, and fees. In light of the debtor's concession that he misappropriated the creditor's funds, the court's role was to determine the amount of the creditor's loss. The court held that the creditor had satisfied its burden of showing, via gross profit analysis, that the full amount of its claimed losses was caused by the debtor's embezzlement. The debtor's counterclaims were denied because the record did not support one claim, and the debtor did not have standing to assert the other.