Opinion
No. 79-488-BK-JLK-W-2
January 25, 1980
Former Bankruptcy Act — Discharge of Debt — False Financial Statement — Misnomer of Items
Even though a financial statement appeared to contain misnomers in that certain items were not correctly identified and certain of the values appeared to be "optimistic," the bankrupt was entitled to a discharge since the inaccuracies were unintentional and the creditor-bank had knowledge of the bankrupt's affairs. Further, there was no evidence that any renewed financial information was requested or provided in regard to the bankrupt. See Sec. 14(c)(3) at ¶ 2132.
[Digest of Opinion]
The trustee's complaint, seeking a denial of discharge, deals with various aspects of the bankrupt's financial statement received into evidence by the court. The execution and delivery of the statement was admitted by the bankrupt and therefore was not an issue.Under the facts of the case, the bankrupt had substantial discussions with a representative of the creditor-bank for the purpose of obtaining a loan for his tire company. Having received guidance in the preparation of the loan application, including the personal financial statement in question, he made an application for the loan. Further, the bankrupt went to an accountant recommended by the creditor who prepared the financial statement. The creditor had previous dealings and was familiar with the affairs of the bankrupt and his tire company through prior banking relations.
Although the financial statement appeared to contain misnomers in that certain items were not correctly identified in the technical sense and certain of the values appeared to be optimistic, the court found that the creditor did not substantially rely upon the financial statement, that no representations were materially false and that any inaccuracies or misnomers were unintentional and were the work product of an accountant selected by the bank. Consequently, the creditor's complaint objecting to discharge was dismissed.