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Vol 14, Num 5 l August 2016

Technology and Intellectual Property

► In This Issue:

Case Summary: Husky International Electronics, Inc. v. Ritz, 136 S.Ct. 1581 (2016) Expands Scope of § 523(a)(2)(A)


Vera Kanova
U.S. Bankruptcy Court
(M.D. PA)
Harrisburg, PA


In a 7-1 decision written by Justice Sotomayor, with Justice Thomas dissenting, the Supreme Court ruled that actual fraud under Section 523(a)(2)(A) of the Bankruptcy Code does not require a false representation and is broad enough to include a fraudulent conveyance.

Chrysalis Manufacturing Corp. purchased products from Husky International Electronics Inc. and became indebted to Husky in the amount of approximately $164,000. Instead of paying back Chrysalis’s debt to Husky, Daniel Ritz, the director of Chrysalis, transferred large sums out of Chrysalis’s accounts into other entities that he controlled. Husky sued Ritz seeking to hold him personally liable for the $164,000 debt, arguing that by transferring Chrysalis’s funds to other entities, Ritz effectuated actual fraud. Ritz in turn filed for Chapter 7 bankruptcy. Husky initiated an adversary proceeding against Ritz again seeking to hold him personally liable for Chrysalis’s debt and also seeking for the debt to be found nondischargeable under Section 523(a)(2)(A) as being obtained by actual fraud.
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Case Summary: Failla v. Citibank, 542 BR 606 (S.D. Fla. 2015): The Consequences of Choosing to Surrender Property


Catherine Martarella
Schwent Law
Festus, MO


Chapter 7 debtors who own real property need to understand their options, and the potential consequences of their choices. In Failla v. Citibank, 542 B.R. 606 (S.D. Fla. 2015), the court held that a debtor who states his or her intention to surrender under Section 521(a)(2) cannot defend a subsequent foreclosure. This case summary will review the court’s analysis, and how this decision may impact future cases.

In Failla, the debtors had indicated they would surrender their real property in the initial statement of intention. At the time of the bankruptcy filing, the debtors had some equity in the property. Subsequently, the debtors decided they wanted to keep the property, and they filed an amended statement of intention to reaffirm the debt.
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Summer Conferences Provide Relevant and Insightful Materials

Need more information on bankruptcy forms updates or consumer fraud issues? We've got you covered! ABI provides all members with unrestricted access to conference materials. Review selected materials below and visit online for a complete listing!

7th Circuit Bankruptcy Conference


Midwestern Bankruptcy Institute

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