A creditor holding only nondischargeable debts does not have standing to pursue a complaint for denial of discharge under Section 727(a), according to a district judge in Detroit.
A husband held claims against his bankrupt former wife arising from their divorce proceeding. His claims were nondischargeable under Sections 523(a)(5) and (a)(15). Evidently seeking to punish the wife, the former husband alleged fraud in her petition and initiated an adversary proceeding attempting to deny her discharge under Section 727(a).
Sua sponte, the bankruptcy judge dismissed the discharge complaint for lack of subject matter jurisdiction, saying that the husband could not litigate the rights of other creditors.
District Judge Marianne O. Battini reached the same conclusion in her decision on Sept. 13.
The husband argued that Section 727(a) is punitive, not just remedial, thus relieving him of the need for having a personal financial stake in the outcome.
Since all of his claims would survive bankruptcy regardless of the outcome of the dischargeability complaint, Judge Battini said that the husband had no standing under Article III “to bring such a generalized grievance or litigate the interests of others.”
Judge Battini cited bankruptcy court decisions from Illinois and Michigan as reaching the same result on standing. She went on to say that the participation of creditors is not required to enforce rules on discharge because a bankruptcy judge sua sponte can initiate proceedings under Section 727(a).