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Patrick S. Layng, United States Trustee v. Mohammad Tahseen (In re: Mohammad Tahseen)

18 B 03134, 22 A 00016
While his bankruptcy case was pending, and after his discharge was entered, Debtor granted a mortgage without court authority. Trustee sought turnover of documentation and the loan proceeds, first informally and then through a motion for turnover. The court granted the motion for turnover. Debtor did not comply fully with the turnover order, so Trustee brought a motion for contempt. The court held an evidentiary hearing and entered an order finding Debtor in contempt for failure to turn over all available proceeds. Debtor purged the contempt. Plaintiff U.S. Trustee then sought revocation of Defendant/Debtor’s discharge under 11 U.S.C. §§ 727(d)(2) and (d)(3). Parties filed cross motions for summary judgment. HELD: Both motions denied. Under § 727(d)(2), a material question of fact exists as to whether Defendant’s course of conduct and delay in reporting, delivering or surrendering the mortgage proceeds constitutes reckless behavior that would support a finding that he acted knowingly and fraudulently. Under § 727(d)(3), there is no material dispute that Defendant received the turnover order and did not comply fully. The burden of production then shifts to Defendant to explain his failure to comply. A material question of fact exists as to whether Defendant has sufficiently explained the delay in obeying the turnover order.

Tuesday, April 18, 2023