Allred v. Vilhauer (In Re Vilhauer)
458 B.R. 511
8th Cir. BAP2011Background
- Vilhauer debtors filed a voluntary Chapter 11 petition, later converted to Chapter 7; Plains Commerce Bank held security interests in livestock and sought relief from stay; 1,134 head of cattle were reported on the farm in January 2010; 117 head were later unaccounted for between January and March 2010; Debtors agreed to liquidation of collateral and to file a plan, but failed to do so by deadline; Bank liquidated 1,017 cattle by March 2010; Trustee filed adversary seeking denial of discharge under § 727(a)(5) for loss of assets and § 727(e)(5); Bankruptcy Court denied discharge, finding loss unexplained and not credible; on appeal, the panel affirmed, upholding the credibility findings and the denial of discharge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether debtors satisfactorily explained the loss of assets under § 727(a)(5). | VilHauer: loss explained by weather and carcass disposal. | VilHauer: loss insufficiently explained; Bank met its burden. | Yes; debtors failed to provide a credible explanation. |
| Whether the Bankruptcy Court properly weighed credibility of competing evidence on cattle losses. | Bank supported by photos and witness testimony. | Debtors provided corroboration; photos were credible. | No; court’s credibility determinations were not clearly erroneous. |
Key Cases Cited
- In re Sendecky, 283 B.R. 760 (8th Cir. BAP 2002) (pertains to standard for reviewing § 727(a)(5) findings and deference to trial court credibility)
- Anderson v. Bessemer City, 470 U.S. 564 (1985) (requires deference to trial court on credibility when reviewing for clear error)
- In re Reed, 310 B.R. 363 (Bankr.N.D.Ohio 2004) (discusses reasonableness and verifiability of debtor explanations)