Warchol v. Barry (In Re Barry), 451 B.R. 654

Prior to the bankruptcy, the Barrys undertook a failed home renovation for Warchol, receiving $75,300 and leaving her home in disrepair; a state court suit followed seeking attachment of the Pond Street Property.
After Warchol’s complaint and service, the Barrys filed for a $90,000 home equity loan in July 2004; the loan was approved in August 2004.
Arbitration later favored Warchol, yielding an Award of $234,599.03 on October 12, 2007; the Award was filed with the state court on November 13, 2007.
To secure the anticipated judgment, the Barrys granted four mortgages on the Broadway Property to various creditors between April and October 2007, while insolvent.
In November 2007 the Barrys sold the Broadway Property and satisfied the mortgages from sale proceeds; the state court ordered Mr. Barry to pay about $26,000 to Warchol.
The Barrys filed a joint Chapter 7 petition on December 16, 2007; Warchol filed a claim in the bankruptcy case for the Award, and an adversary proceeding followed seeking denial of discharge under § 727(a)(2)(A) among other theories.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to object to discharge against a co-debtor	Warchol is a creditor of Mr. Barry and may object to Mrs. Barry’s discharge.	Warchol has no claim against Mrs. Barry; standing requires a creditor; no § 302 consolidation, hence no standing.	Warchol lacks standing to object to Mrs. Barry's discharge; reversal granted as to Mrs. Barry.
Mrs. Barry's intent under § 727(a)(2)(A)	Totality of circumstances shows the transfers were to hinder or delay Warchol’s collection.	Intent to hinder is not proven; transfers were to satisfy others or preserve business; timing alone is not dispositive.	The court found Mrs. Barry acted with intent to hinder or delay; discharge denied.
Mr. Barry's intent under § 727(a)(2)(A)	Badges of fraud and timing show intent to hinder or delay Warchol’s collection.	Transfers were for business rescue and creditor preferences; timing not conclusive.	The court upheld the bankruptcy court’s finding of intent to hinder or delay; discharge denied.

In re Marrama, 445 F.3d 518 (1st Cir. BAP 2006) (four Marrama indicia of fraudulent intent; preponderance standard to deny discharge)
In re Schifano, 378 F.3d 60 (1st Cir. 2004) (citation for Marrama framework on intent)
In re Lang, 246 B.R. 463 (Bankr.D.Mass. 2000) (totality of circumstances in intent analysis; 'wolf at the door' concept)
In re Sterman, 244 B.R. 499 (D.Mass. 1999) (badges of fraud; series of transfers as indicating intent)
Cadle Co. v. Marra, 308 B.R. 628 (D. Conn. 2004) (financial favoring of some creditors does not negate intent to hinder)