In re Chambers, Bankruptcy No. 3-82-02636

• Decision Date: 27 January 1984
• Docket Number: Bankruptcy No. 3-82-02636,Adv. No. 3-83-0004.
• Citation: 36 BR 791
• Parties: In re Tommy CHAMBERS, Debtor. Gary R. LORENZ, Linda Lorenz, Plaintiffs, v. Tommy CHAMBERS, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Kentucky

36 B.R. 791 (1984)

In re Tommy CHAMBERS, Debtor Gary R. LORENZ, Linda Lorenz, Plaintiffs, v. Tommy CHAMBERS, Defendant.

Bankruptcy No. 3-82-02636, Adv. No. 3-83-0004.

United States Bankruptcy Court, W.D. Kentucky.

January 27, 1984.

Alan W. Roles, Louisville, Ky., for plaintiffs.

Louis M. Nicoulin, Louisville, Ky., for defendant.

MEMORANDUM OPINION

G. WILLIAM BROWN, Bankruptcy Judge.

This adversary proceeding comes before the Court on the complaint against debtor under 11 U.S.C. § 727(a)(2). The debtor, prior to the filing of his petition, operated an automative repair business, doing business as C & M Diesel and Truck Repair, continuing said business venture up to the filing for relief on July 26, 1982. Plaintiff alleges the debtor transferred, removed and concealed property of the estate within one (1) year of the filing of his petition, and further failed to list certain accounts receivable due the business venture on the date of filing or the receipt of their payment postpetition.

A trial on the issues presented was held, at which time testimony of witnesses and documentary proof was given. Said trial revealed several accounts to be in question. In each instance work was performed pre-petition. Said receivables were unlisted in the debtor's schedules and payment therefor was received post-petition. Plaintiff alleges said course of conduct demonstrates an intent by the debtor violative of 11 U.S.C. § 727(a)(2), which reads as follows:

(a) The court shall grant the debtor a discharge unless—

(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed—

(A) property of the debtor, within one year before the date of the filing of the petition; or

(B) property of the estate, after the date of the filing of the petition. . . .

Of paramount issue was a receivable due from E & L Transport Company. The proof establishes that the debtor's father, prior to the filing of the petition, advanced certain funds for the purchase of needed parts to complete the repairs; that said repairs were completed and invoiced April 5, 1982; and that said advances totaled approximately $3,000.00. On August 3, 1982, approximately ten (10) days after the filing of this petition, E & L Transport issued its check in the amount of $11,500.00 payable to C & M Diesel. Thereafter said remittance was altered on its face to reflect the payee as "C & M Diesel OR Curtis C. Chambers", the debtor's father, and with the knowledge and consent of the debtor was endorsed by Curtis C. Chambers, presented and honored for payment.

It is admitted debtor's father is a 78-year old gentleman retired over 16 years with no knowledge of debtor's business. He gave no directions and had no involvement in the work order in question, and his sole role was the advancement of approximately $3,000.00 for parts to complete the job. As such, he was at best an unsecured creditor of the debtor, and his receipt postpetition of the total sum of $11,500.00 covering this invoice resulted in a preference to the extent he was reimbursed for funds actually expended and was without consideration for the balance thereof. The entire course of dealing in this instance demonstrates an intent to deprive the debtor's creditors of funds to which they were entitled and a deliberate attempt to so mask the transaction by changing the payee's name to an insider as to show an intent to hinder, delay or defraud debtor's estate and creditors.

The testimony and proof further establish at least two other accounts which were likewise received postpetition and unlisted. In a request for admissions, debtor acknowledges receipt of $2,500.00 from the "Metcalf" account and approximately $450.00 from the "Short Line...