Jоhn and Mary Connors filed for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code listing aggregate debts of *898 over $19 million — more than $12 million of which they owed to Union Planters Bank (“UPB”). On October 5, 2000, the bankruptcy court granted UPB’s objection to discharge, holding that the debtоrs failed to keep adequate records as required by 11 U.S.C. § 727(a)(3). On June 28, 2001, the district court affirmed the denial of discharge. The Connors now appeal. Because we agree with the bankruptcy and district courts that the records provided were inadequate to allow UPB to ascertain the Connors’ financial condition or business transactions, we affirm.
I. Background
In 1994, the Connors took out two lines of credit with Magna Bank (now UPB) in Belleville, Illinois, with a limit of $19 million. Over the course of the next thirteen months, the Connors borrowed an additional $9,002,116.10 from UPB, bringing the approximate total to $28 million. These loans were secured with 2.5 million shares of stock in Agrosy Gaming Corporation, a casino boat partially owned by John Connors before it became a publicly traded comрany. At its highest, the stock traded at over $36 per share. Because UPB believed that the lines of credit were more than adequately secured, it neither inquired as to how the money was to be used nor placed any restrictions on its application. When the Connors needed money, they would call a UPB officer who would release the requested funds into a personal checking account, wire them directly to one of the Connors’ projects, or apply them to pay off outstаnding loans. By 1997, the value of the Agrosy stock had fallen to under $3 per share. After selling the stock, UPB obtained a lien on almost all of the Connors’ property and demanded repayment of all outstanding loans — approximately $12 million.
The Connors used thе large sums of money they borrowed from UPB, as well as that borrowed from two other banks and four individuals, to fund four major ventures: the building of a home in Belle-ville that cost $4 million; the building of the Kings Point Racquet & Fitness Club, a tennis facility also located in Belleville that cost in excess of $10 million; the purchase of the Alystra, a casino in Las Vegas, Nevada; and the purchase of Crapper Jacks, a casino in Cripple Creek, Colorado. None of these projects was successful. The casinos lost money, and the Connors’ plans to sell Crapper Jacks and develop the Alystra property fell through. They both closed due to lack of funds. The tennis club similarly failed to achieve an operating gain. At trial, John Connors testified that he did not reсall why he obtained each of the loans specifically, or where the proceeds from each went. Money was shifted among the various ventures in an attempt to keep each above water.
The Connors admittedly did not keeр many records of their financial transactions, most of which were handled through their checking accounts at UPB and at West Pointe Bank & Trust. They concede that they disposed of financial records when they moved from their home. They did, however, provide the bankruptcy court with bank statements that recorded deposits and withdrawals to and from their various checking accounts, and cancelled checks. They also provided balance sheets and other income statements of Kings Point. These documents will be further described below, as necessary.
In the four years preceding their bankruptcy, over $16 million of check and other debit activity flowed from the Connors’ checking accounts. During the year before the filing, however, thе sum equaled only about $5,000. The Kings Point records indicate that they ate some of their meals there, and that the racquet club repaid the Connors a portion of its debt.
*899 II. Discussion
The bankruptcy court denied discharge of debt, pursuant to 11 U.S.C. § 727(a)(3) which provides that a court may deny such relief if:
The debtor has concealed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial conditiоn or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case....
The provision requires that debtors produce records that provide “enough information to ascertain the debtor’s financial condition and track his financial dealings with substantial completeness and accuracy for a reasonable period past to present.”
In re Martin,
The Connors contend that the cancelled cheeks and deposit account statements that they provided to the court, along with the Kings Point financial records, adequately account for their financial transactions and condition for the several years prior to filing for bankruptcy. For example, 1 they purport to show that the use of the $225,000 loan from John’s brother is easily traced. The West Pointe bank statement dated 7/23/97, they proclaim, shows that the Connors had an overdrawn balance on their prior statement and that the full loan proceeds were deposited on 6/30/97. The July, August, and September bank statements аlso show nearly 100 checks and debits depleting the account, and no additional deposits. Therefore, they contend, it is easy to see from these records exactly where the loan proceeds went. Checks or debits were dispersеd to Caesars Palace in Las Vegas to pay a gambling debt ($100,000), a law firm to pay for legal fees ($34,000), Mastercard, retail stores, utility companies, a country club, and West Pointe Bank. The additional loans — from banks and individuals — the Connors claim, can bе similarly traced.
The bankruptcy court found that the documents that the Connors produced did not meet the § 727(a)(3) standard. First, this Circuit’s case law makes clear that neither the court nor a creditor is required to reconstruct a debtor’s financial situatiоn by sifting through a morass of checks and bank statements.
Scott,
Also, the bankruptcy court held that even if the documents that they provided had been properly recorded and presented as a statement of their financial transactions, the picture would remain incomplete. After the funds that UPB, аmong others, lent to the Connors were initially spent, they were further shifted among the various business enter prises. Thus, even assuming that the documents presented to the bankruptcy court constituted a sufficient accounting of the transactions that they reсord, they do not allow UPB to reconstruct the business transactions between the Connors and their various enterprises.
The Connors argue that because they filed for personal bankruptcy, it is their disbursements that are critical — not those of the casinos or racquet club — and those are shown within the records produced. However, considering the significance of the business entities to the Connors’ bankruptcy, as well as the intertwining of personal and business expenses, we find that the Connors’ business transactions cannot be fully ascertained without further tracing of the loan proceeds. See id. at 970 (“[As the debtors] directly controlled both the flow of funds and the investment decisions of the business entities, we conclude that they should be held to a higher level of sсrutiny than an ordinary debtor.”). Moreover, at least one $500,000 loan— from the J.H. Berra Construction Company- — -is not documented at all. Several other personal loans were deposited into the Connors’ checking accounts, but no record exists as to their purpose or terms. We do not find the court’s conclusion to be clearly erroneous.
Furthermore, as the bankruptcy court reasonably found, the Connors failed to provide a complete record as to their personal financial status and living expenses during the two years preceding their declaration of bankruptcy. The Connors argue that the bankruptcy court erred by ignoring the financial records of the Kings Point club during the pre-bankruptcy period. These records, as well as the testimony by the Kings Point general manager, purport to show that the club provided meals to the Connors, paid many of their utility bills, and signed checks directly to John Connors. Although these records do provide a piece to the puzzle, as the district court noted, they — along with the totality of the documents produced — do not present the entire picture. The Connors have no primary records of loan repayments received from their businesses. There is no way to know if the money and services that Kings Point provided were the Connors’ sole source of income. In fact, John Connors’s testimony during the hearing on UPB’s motion for summary judgment indicates that it was not; they received additional loans from family members and friends. A recording of money given to the Connors from one entity is not adequate to show their living expenses; the Connors had the duty to keep records of all repayments and other moneys actually received. They failed to do so.
*901
Finally, the Connors argue that evеn if grounds for denying their discharge of debt exist, the bankruptcy court abused its discretion by failing to weigh the equities of the case. We cannot agree. The debtors contend that because they would face such a sizable amount of debt in the absenсe of discharge — more than $15 million — and because there is no evidence of intent to defraud their creditors, the equities favor a discharge. It is true that “it remains within the discretion of a bankruptcy court to grant a discharge even when grounds for deniаl of discharge are demonstrated to exist.”
In re Hacker,
III. Conclusion
Although the denial of discharge in bankruptcy “should be construed strictly against the creditor and liberally in favor of the debtor,” such discharge is not a right, but a privilege.
Juzwiak,
Notes
. An example is required here as we, like the creditors and courts below, decline to analyze each check and each bank statement produced to reconstruct the Connors’ financial dealings.