The last few years have been marked by unprecedented high levels of liquidity in the U.S. economy. Despite the recent tightening of credit markets in the wake of the sub-prime crisis, many capital sources seeking to deploy capital still remain.
Section 523(a)(4) of the Bankruptcy Code excepts from discharge any debt “for fraud or defalcation, while acting in a fiduciary capacity, embezzlement, or larceny.” While at first glance interpreting this section of the Code might appear straightforward, the current state of the law appears to contradict this notion. Some of this confusion may stem from the fact that the Bankruptcy Code does not define the terms fraud, defalcation or fiduciary capacity. Rather, these terms have been subject to judicial interpretation.
Too often in my role as a trustee or as the trustee’s attorney, I run into a debtor, defendant or witness who will claim the information I need is missing, or make a dubious claim not to remember key facts. This article distills some of my thoughts and observations on how to deal with these situations.
Expand the “Web of Lies”
I don’t know if this happens to you a lot or whether it is peculiar to my household but … I have two feet. I know this as I see them everyday. They have conveyed me faithfully over many miles. Each morning I put on two shoes and two socks, and at the end of the day I take off two shoes and two socks. The latter speed their way into the laundry basket whence the Lovely Lady of the House (LLoH)—while refusing to deal with anything that needs the touch of an iron—whisks them away on an irregular but consistent basis.
During a Mexican insolvency proceeding, prosecution of several criminal conducts may occur. Such conducts may be attributed to the members of the board of directors, managers, employees and receivers of the insolvent company. The basic criminal conducts are: (i) The intended aggravation of the generalized breach of payment obligations; (ii) The failure to file the accounting information within the term established by the district court; (iii) The request of the acknowledgement of an inexistent or simulated credit.
Bankruptcy Judge Jeff Bohm of the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, recently rendered an opinion that has the potential to significantly affect homestead rights. In re Presto, __ B.R. __, No. 06-33618, 2007 WL 2913316 (Bankr. S.D. Tex. Oct. 5, 2007).