647 B.R. 1
Bankr. E.D.N.Y.2022Background
- Debtor Deonarine Parasram filed Chapter 11 on June 16, 2016; he signed schedules and a statement of financial affairs under penalty of perjury.
- The confirmed plan (2017) was a liquidating plan; the Confirmation Order required Parasram to file monthly post‑confirmation operating reports and to cooperate in preparing tax returns.
- Post‑petition, Parasram acquired interests in three properties (Queens Village; 98 Sally Lane; 100 Sally Lane) and later transferred them, but did not disclose those interests or obtain court approval for the transfers.
- Operating reports were initially filed but reporting lapsed (missing reports from mid‑2018 through 2022); Parasram prepared many reports himself and claimed some disclosures were made in operating reports or orally.
- Plaintiff Randy Brisman sued in two adversary proceedings seeking to (a) avoid/recover real property and (b) deny Parasram’s discharge under 11 U.S.C. §§ 1141(d)(3) and various § 727 grounds.
- After trial (Debtor testified), the Court found Parasram concealed estate property, made false statements, and willfully violated the Confirmation Order, and denied his discharge on several § 727 grounds.
Issues
| Issue | Brisman’s Argument | Parasram’s Argument | Held |
|---|---|---|---|
| Whether plan satisfies 11 U.S.C. § 1141(d)(3)(A) (liquidation of substantially all estate property) | Plan is liquidating and disposes of virtually all estate assets | No meaningful contest | Held: Satisfied — plan liquidating. |
| Whether Parasram engaged in business after plan consummation (1141(d)(3)(B)) | Parasram continued operating Vandi and other assets post‑confirmation | He was only a part‑time employee/buyer for the grocery and had no ownership; any post‑confirmation operation of Vandi was unauthorized | Held: Did not engage in business for §1141(d)(3)(B) purposes; working as a paid employee did not qualify; unauthorized use of assets does not convert to “engaging in business.” |
| Whether denial of discharge is warranted under 11 U.S.C. § 727(a)(2)(B) (transfer or concealment of estate property with intent to hinder/delay/defraud) | Parasram concealed and transferred the Queens Village and Sally Lane properties post‑petition to evade creditors and avoid estate claims | Claimed nominal or accommodation status, faulty memory, or inadvertence; denied intent to defraud | Held: Plaintiff proved property were estate assets, Parasram concealed/transferred them and a pattern of omissions and conduct supported inference of fraudulent intent — discharge denied on this ground. |
| Whether discharge denied under 11 U.S.C. § 727(a)(4)(A) (false oaths) | Schedules, monthly operating reports, and sworn statements omitted or misstated material property and facts | Omissions were inadvertent, due to poor memory, language issues, or bad bookkeeping | Held: False statements and omissions were material and made with fraudulent intent (pattern of omissions) — discharge denied on this ground. |
| Whether discharge denied under 11 U.S.C. § 727(a)(5) (failure to satisfactorily explain loss of assets) | Assets were unaccounted for and not explained | Parasram testified and explained the transfers of the three properties | Held: Parasram’s testimony accounted for disposition of the properties sufficiently — plaintiff failed on §727(a)(5). |
| Whether discharge denied under 11 U.S.C. § 727(a)(6) (willful failure to obey court order re: operating reports/cooperation) | Parasram willfully failed to file required post‑confirmation reports and to cooperate as ordered | Claimed self‑preparation of reports, inadvertence, and financial motives | Held: Failure to file numerous required reports was willful noncompliance with the Confirmation Order — discharge denied on this ground. |
Key Cases Cited
- Butner v. United States, 440 U.S. 48 (U.S. 1979) (state law defines property interests for bankruptcy estate)
- United States v. Whiting Pools, 462 U.S. 198 (U.S. 1983) (distinguishing estate property and property of others)
- In re Howard’s Appliance Corp., 874 F.2d 88 (2d Cir. 1989) (bankruptcy estate does not include only minor interests such as bare legal title)
- Grausz v. Sampson, [citation="63 Fed. App'x 647"] (4th Cir. 2003) (post‑confirmation employment as employee does not necessarily constitute engaging in business)
- In re Um, 904 F.3d 815 (9th Cir. 2018) (individuals who are merely employees of others are not engaging in business post‑confirmation)
- Pisculli v. T.S. Haulers (In re Pisculli), [citation="408 F. App'x 477"] (2d Cir. 2011) (elements required to prove §727(a)(2)(B))
- D.A.N. Joint Venture v. Cacioli (In re Cacioli), 463 F.3d 229 (2d Cir. 2006) (burden and proof for §727(a)(5) explanations)
- In re Dubrowsky, 244 B.R. 560 (E.D.N.Y. 2000) (shifting burdens in discharge objections)
- Felder v. United States Tennis Ass’n, 27 F.4th 834 (2d Cir. 2022) (addressed joint‑employer pleading; discussed here as inapposite to the §1141(d)(3) inquiry)