187 B.R. 67 (Bkrtcy.E.D.N.Y. 1995), 892-8549-20, In re Chalasani

Docket Nº:Adv. No. 892-8549-20.
Citation:187 B.R. 67
Party Name:In re Prasad CHALASANI, Debtor. STATE BANK OF INDIA, New York Branch, Plaintiff, v. Prasad CHALASANI, Defendant. Bankruptcy No. 892-84977-20.
Case Date:March 23, 1995
Court:United States Bankruptcy Courts, Second Circuit

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187 B.R. 67 (Bkrtcy.E.D.N.Y. 1995)

In re Prasad CHALASANI, Debtor.

STATE BANK OF INDIA, New York Branch, Plaintiff,


Prasad CHALASANI, Defendant.

Bankruptcy No. 892-84977-20.

Adv. No. 892-8549-20.

United States Bankruptcy Court, E.D. New York, at Westbury.

March 23, 1995

Abel Jack Schwartz, Garden City, New York, for debtor.

Allan B. Mendelsohn, Chapter 7 Trustee, Syosset, New York.

Richard S. Last, Dunn & Zuckerman, P.C., New York City, for State Bank of India.

Aaron R. Cahn, Ober, Kaler, Grimes & Shriver, New York City, for Society of Savings.


ROBERT JOHN HALL, Bankruptcy Judge.


This matter comes before this Court 1 upon Prasad Chalasani's ("Debtor" or "Defendant") motion to reopen his chapter 7 case in order to bring a motion to reopen the instant adversary proceeding to vacate the default judgment. Additionally, Society for Savings ("Society"), a secured creditor of the Debtor, has requested that adversary proceeding

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captioned "State Bank of India, New York Branch, Plaintiff v. Prasad Chalasani, Defendant," Adversary Proceeding Number 892-8549-20, commenced on December 8, 1992 and closed on October 29, 1993, be reopened so that Society can be substituted as plaintiff and be allowed to amend this Court's September 29, 1993 Order that granted a default judgment against the Debtor. Society filed a Memorandum of Law in Support of their motion. In response to Society's motion, State Bank of India ("SBI" or "Plaintiff") filed an Affidavit in Opposition. Society filed a Reply in Further Support.

Arguments in support of and in opposition to the motions were heard. The Debtor's motion was denied from the bench and an order was directed to be settled. The order as settled did not accurately reflect the Court's ruling and was not entered. The disposition of that motion will be encompassed in this decision. For the reasons set forth below, Society's motion to reopen the adversary proceeding to be substituted as plaintiff and request to amend the default judgment is GRANTED.


Prasad Chalasani subjected himself to the jurisdiction of this Court when he filed a chapter 7 petition with this Court on September 9, 1992. The Law Office of T. Kevin Murtha was listed as his representative. Allan B. Mendelsohn, Esq., was appointed the chapter 7 trustee ("Trustee"). The Statement Pursuant to Rule 2016(b) indicates that $3,880.00 was paid for legal services. The Statement of Financial Affairs lists thirteen lawsuits pending against the Debtor in New York and New Jersey courts. SBI is listed as plaintiff in three of those lawsuits. Debtor lists in "Schedule B--Personal Property," subsection (20) "other contingent and unliquidated claims of every nature," two claims against SBI valued at approximately $50,739,600.00. The remainder of the claims are listed at $50,000,000.00 for a total of $100,739,600.00. Society is listed on Schedule D as a secured creditor in the amount of $565,000.00 as the holder of a mortgage on Debtor's residence at Oakley Court, Mill Neck, New York ("Residence"). There are two other secured creditors listed. Both are mortgagees on the Residence. These secured claims total approximately $1.5 million. Schedule F lists 32 creditors totalling approximately $6.4 million. SBI is listed as a creditor for claims arising out of personal guarantees:

1990 personal guarantee $957,953.00 (listed as disputed)

February 1991 personal guarantee $310,000.00

November 1991 personal guarantee $120,000.00


Interestingly, Debtor's summary of schedules lists the following figures:

Total Assets: $101,592,100.00

Total Liabilities: $ 8,008,956.25

There was an order and application filed to amend Schedule F to add an additional $5 million in "potential claims."

SBI commenced an adversary proceeding on December 8, 1992 seeking to have their debt of approximately $1.7 million deemed nondischargeable pursuant to 11 U.S.C. section 523(a)(2)(A) and (B). Additional relief requested a denial of Debtor's discharge pursuant to 11 U.S.C. section 727(a)(3), (4) and (5). On April 29, 1993, an answer was filed on behalf of the Debtor by T. Kevin Murtha & Associates, P.C., containing general denials, no counterclaims, and a "Wherefore" clause requesting that the "Verified Complaint" be dismissed.

Prior to filing this answer, by Notice of Motion dated January 12, 1993, Debtor requested that pursuant to 11 U.S.C. section 707...

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