Desiderio v. Parikh (In Re Parikh)
2011 WL 2119031
Bankr. E.D.N.Y.2011Background
- Plaintiff Desiderio obtained judgments against Debtor; Debtor filed a Chapter 7 bankruptcy after a dismissed Chapter 13, with a multi-day trial held 2009–2010.
- Pre-petition transfers and schemes included a $300,000 Meera Mortgage to Debtor’s brother’s Meera Management intended to shield equity, later voided as fraudulent by a state court.
- Debtor transferred Mineola Health Food shares to his wife and later ran related business for cash flow; disclosures of these assets were incomplete or delayed.
- Debtor held and later disclosed ownership interests in Kuliwala Food Corp. (70%) and McChurch Grocery & Newsstand, with initial nondisclosure in schedules followed by amended disclosures.
- A $45,000 withdrawal from the Citibank VRESA within seven months of filing depleted home equity and was routed to Debtor’s wife; this was not disclosed in initial filings.
- Debtor’s schedules, statements, and testimony contained numerous omissions and inconsistencies, despite counsel’s involvement, and amendments followed significant creditor scrutiny.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bad faith dismissal under §707(a) | Desiderio argues Debtor filed to obstruct collection and hide assets. | Parikh contends omissions were inadvertent and due to stress/language; not bad faith. | Bad faith dismissal under §707(a) established. |
| Denial of discharge under §727(a)(4)(A) for false oath | Debtor knowingly falsified or omitted material facts in schedules and at §341. | Omissions were inadvertent; amendments cureable; no fraudulent intent. | Discharge denied under §727(a)(4)(A). |
| Denial of discharge under §727(a)(2)(A) for asset transfers | Transfers (e.g., Meera Mortgage, $45k withdrawal) intended to hinder creditors. | Transfers were not for fraudulent purpose and were otherwise explained. | Discharge denied under §727(a)(2)(A). |
| Proceeding retained rather than dismissed; open estate benefits creditors | Keeping case open allows trustee to administer assets; disallowing discharge insufficient. | Dismissal preferable as final relief. | Case to remain open under trustee supervision; discharge denied under §727. |
Key Cases Cited
- In re Aiello, 428 B.R. 296 (E.D.N.Y. 2010) (bad faith as cause under §707(a) recognized in this district)
- In re Lombardo, 370 B.R. 506 (E.D.N.Y. 2007) (overarching factors for bad-faith dismissal analysis)
- In re Smith, 507 F.3d 64 (2d Cir. 2007) (equitable considerations; best interests of all parties)
- In re Dinova, 212 B.R. 437 (E.D.N.Y. 1997) (guidance on bad-faith consideration and debtor conduct)
- In re Murray, 249 B.R. 223 (E.D.N.Y. 2000) (reckless disregard for truth may establish fraudulent intent under §727(a)(4)(A))
- In re Tully, 818 F.2d 106 (1st Cir. 1987) (equitable administration of estates; honesty in disclosures)