Opinion
No. BK-4-78-110
April 13, 1979
Bankrupt — Discharge, When Granted — False Financial Statement
A bankrupt will not be denied a discharge under Section 14c(3) of the Bankruptcy Act where the bankrupt did not obtain loans from his creditors by the giving of allegedly false financial statements.
The trustee objected to the bankrupt's discharge under Section 14c(3), claiming that the bankrupt had obtained loans from two banks by making materially false financial statements in writing. The court refused to determine whether either of bankrupt's statements constituted "a materially false statement in writing respecting his financial condition", because in both instances it was determined that the bankrupt did not obtain a loan from the bank by the giving of such statements. In the first instance, bankrupt wanted the bank to finance a crop. Even though a note was signed, the bankrupt was unable to obtain the acreage and no crop was financed. In the second instance, the bankrupt had adequate collateral or a co-signer at all times such that no loan was obtained where the bank relied upon the financial statement.
In denying the trustee's complaint objecting to discharge, the court noted that in deciding an issue regarding discharge the court must be mindful of the purpose of the Bankruptcy Act — to give the debtor "an opportunity for a fresh start." See Sec. 14c(3) at ¶ 2131