In re Rosenfeld
In re Rosenfeld
Opinion of the Court
The issue before the court is whether the court can or should vacate the order granting the debtor a discharge in order to allow the completion of the Section 341 meeting, 11 U.S.C. § 341. The court concludes that the order granting the discharge should be vacated pending completion of the Section 341 meeting and the examination of the debtor.
On January 25, 1983 the office of the United States Trustee filed an application seeking a nunc pro tunc extension of the time to file objections to discharge. Such extension was sought on the ground that the debtor filed her schedules and statement of affairs subsequent to the last date to object to discharge. On January 26, 1983, the court extended, as to creditors added in the schedules filed on January 24, 1983, the time to object to discharge to March 14, 1983. The Section 341(a) meeting was adjourned to March 7,1983, and the discharge hearing was rescheduled for March 16, 1983. The debtor appeared at the discharge hearing on March 16. No other appearances were made before the court on that date. The order granting the discharge was signed on April 4, and entered on April 14. The 341(a) meeting scheduled for March 7 was further adjourned at the debtor’s counsel’s request. Thus, at the time debtor received her discharge the 341(a) meeting had not been closed and the debtor’s examination had not been concluded.
The debtor is not an ordinary consumer debtor. The schedules reflect debts of $425,000 to some forty creditors. Although the details are somewhat lacking, the debt- or is apparently a close friend of a well-known comedian by the name of Jackie Mason, also known as Jacob Maza, and the debtor’s address is listed as in care of Mr. Maza. The debtor in the early 1970’s undertook some kind of management role with respect to Mr. Maza, his professional career earnings and his debts and utilized a corporation known as Worldwide Entertainment Corp. for this purpose. A number of the scheduled debts were originally incurred by Mr. Maza. Mr. Maza filed his own bankruptcy petition in this court in 1981 and has not yet received a discharge. Given the length of time over which the events extend and the debtor’s managerial role, the schedules and statement of affairs filed are extremely barren and do not constitute that full and fair disclosure which should be the bedrock on which a discharge is based.
On June 6, 1983 a hearing was held on the motion of Richard Pech (“Pech”), a creditor, seeking an order vacating the discharge and permitting the filing of objections within a reasonable time after the completion of the examination of the debtor and her production of certain documents not yet produced. The trustee joined in this motion. The debtor objects to Pech’s motion on the grounds that Pech, as the debtor’s attorney, was precluded by the attorney-client privilege from bringing certain matters to the court’s attention. The debtor also sought to take Pech’s deposition.
Pech’s papers state that the debtor was a signatory to an agreement dated March 4, 1982 pursuant to which she agreed to purchase for $335,000 a condominium apartment on Wilshire Boulevard, Los Angeles, California and made numerous payments towards the purchase price. They further
Pech argues that pursuant to former Bankruptcy Rule 924, the court should vacate the order of discharge because the order was signed before the Section 341(a) hearing was completed and that Pech’s failure to seek adjournment of the discharge hearing was based on his counsel’s mistake and excusable neglect. The court need not address the question of whether the facts in this case rise to the level of excusable neglect. It is sufficient in this case that the discharge was granted prior to the conclusion of the 341(a) meeting. In effect, a judgment of discharge was entered prematurely by the court. The 341(a) meeting was adjourned on March 7 to enable the debtor to produce certain documents for examination by the creditors. The debtor was aware of this fact when she appeared for her discharge, but failed to advise the court. Under such circumstances it would be an injustice to deny the trustee and creditors the right to examine the debtor and the requested documents before the discharge is granted.
Whether Mr. Pech is entitled to have his debt declared nondischargeable or whether he is equitably estopped on the basis of his conduct does not concern this court at this time. Rather, the court is faced with a situation which calls into question the integrity of the entire bankruptcy process. The court notes that the allegations in the movant’s papers are very serious, and if proved, may amount to a fraud upon the court warranting denial of the discharge. The court cannot allow a fraud to be perpetrated upon it. There are numerous inconsistencies and omissions in the debtor’s schedules and statement of affairs. It may be that the debtor will be able to explain these inconsistencies and omissions, and be entitled to receive a discharge, but the discharge order of April 4 must be vacated in the face of these allegations as it was prematurely granted.
One further point must be addressed. The debtor argues that the evidence which Pech proposes to offer is inadmissible on the grounds of attorney-client privilege. This contention is totally devoid of merit. The proffered documents consist of checks, bank records, and a contract of sale for a condominium. It has consistently been held that negotiable instruments and bank records are not confidential communications and as such are not subject to the attorney-client privilege. United States v. Miller, 425 U.S. 435, 442, 96 S.Ct. 1619, 1623-24, 48 L.Ed.2d 71 (1975); Harris v.
CONCLUSION
Based on the foregoing the court holds that under the circumstances of this case,
SO ORDERED.
. Our holding is limited to vacating the order granting debtor a discharge so that the Section 341 meeting may be completed. The court is not addressing the question of whether the dis
. Pech objected to the deposition on the grounds of burdensomeness since he is located in California. Although not central to this decision, one of the issues raised by Mr. Pech is whether the debtor resides in New York or California, the petition listing only a New York address.
. Cf. former Bankruptcy Rule 404(d)(3) (“On expiration of the time fixed for filing a complaint objecting to discharge the court shall forthwith grant the discharge unless ... (3) it appears .that the bankrupt has failed to attend and submit himself to examination at the first meeting of creditors or at any meeting specially called for his examination....”)
Reference
- Full Case Name
- In re Jyll ROSENFELD, Debtor
- Cited By
- 1 case
- Status
- Published