23-01083
Bankr. W.D. Wash.Apr 30, 2025Background
- Bogdan and Nadezhda Maksimchuk (Defendants), real estate developers, filed for Chapter 11 bankruptcy which was later converted to Chapter 7.
- After defaulting on a construction loan guaranteed by the Defendants, NWBF LLC (Plaintiff) obtained a charging order lien on Defendants’ interests in various real estate entities.
- The Defendants failed to fully and accurately disclose their financial interests in certain properties and entities, specifically regarding the Mercer Island Property.
- The Defendants made transfers from the Mercer Island Property sale proceeds to their affiliated entities and did not disclose these in their original bankruptcy schedules or statements of financial affairs (SOFAs).
- Ms. Maksimchuk withdrew estate funds post-petition without the trustee’s approval and only repaid it on the eve of trial; both Defendants made and maintained false and/or misleading statements under oath about key transactions and properties.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Transfers/Concealment Pre-Petition (§727(a)(2)(A)) | Defendants transferred/omitted assets to hinder or defraud creditors | Transfers were to entities already subject to Plaintiff’s lien; no intent to defraud | Not proven; no denial under (a)(2)(A) |
| Post-Petition Transfer (§727(a)(2)(B)) | Ms. Maksimchuk transferred estate property post-petition with intent to hinder/delay/defraud | Claimed repayment agreement; no intent to hinder creditors | Proven as to Ms. Maksimchuk; discharge denied for her under (a)(2)(B) |
| False Oath (§727(a)(4)(A)) | Defendants knowingly made false oaths about property interests and transfers | Blame on attorney, or claimed misstatements non-material | Proven; discharge denied for both under (a)(4)(A) |
| Records and Explanation of Loss (§727(a)(3), (a)(5)) | Defendants failed to keep adequate records and explain loss of assets | Adequate records existed; all transfers explained at trial | Not proven; no denial of discharge on these grounds |
Key Cases Cited
- Retz v. Samson (In re Retz), 606 F.3d 1189 (9th Cir. 2010) (sets standards for intent and badges of fraud in §727 discharge denials)
- Bernard v. Sheaffer (In re Bernard), 96 F.3d 1279 (9th Cir. 1996) (intent to hinder or delay alone suffices for denial of discharge)
- Gray v. Jackson (In re Jackson), 453 B.R. 789 (Bankr. E.D. Pa. 2011) (court discretion on sufficiency of debtors’ records)
- Aubrey v. Thomas (In re Aubrey), 111 B.R. 268 (B.A.P. 9th Cir. 1990) (truthful disclosure in bankruptcy filings is a condition of discharge)
- Searles v. Riley (In re Searles), 317 B.R. 368 (B.A.P. 9th Cir. 2004) (prompt correction of false oaths may be considered but does not preclude denial of discharge)
- Jett v. Sicroff (In re Sicroff), 401 F.3d 1101 (9th Cir. 2005) (defines elements for willful and malicious injury under §523)