Tanner Scott Campbell

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Elizabeth | . Ku 1

(US. Bankruptey Judge

UNITED STATES BANKRUPTCY COURT

DISTRICT OF COLUMBIA

In re

Tanner Scott Campbell, Case No. 19-00042-ELG

Debtor.

Chapter 7

MEMORANDUM OPINION AND ORDER DISMISSING CASE

On February 8, 2021, the Court conducted a trial on the contested motion of MoSex Exhibit

1, LLC (“MoSex”) seeking dismissal of this chapter 7 case filed by Tanner Scott Campbell (the

‘“Debtor”) for cause, specifically bad faith, under 11 U.S.C. § 707(a).! At the conclusion of the

trial, the Court took the matter under advisement. For the reasons outlined below, the Court finds

that the Debtor’s actions, as well as his failure to submit truthful documents, demonstrate his bad

faith in filing his petition and therefore grants MoSex’s Motion to Dismiss.

This Memorandum Opinion sets forth the Court’s findings of fact and conclusions of law

in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure.” The Court has

' The Court consolidated the trial of this matter with the trial on MoSex’s complaint seeking denial of the Debtor’s

discharge under 11 U.S.C. § 727(a)(3). The Court has separately decided that the Debtor is not entitled to discharge

pursuant to 11 U.S.C. § 727(a)(3). See Memorandum Opinion, Case No. 19-10025, ECF No. 115.

2 Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of

fact when appropriate. See Fed. R. Bankr. P. 7052.

Page 1 of 17

subject matter jurisdiction pursuant to 28 U.S.C. § 157(a). This is a core proceeding under 28

U.S.C. § 157(b)(2)(A) in which final orders or judgments may be entered by a bankruptcy judge.

Venue is appropriate in this Court pursuant to 28 U.S.C. § 1409(a).

I. Procedural History

On January 16, 2019 (the “Petition Date”), after a prolonged period of litigation with

MoSex regarding debts owed by the Debtor on a guaranty as more fully described herein, the

Debtor filed a petition for relief under chapter 7. See Debtor’s Pet., ECF No. 1. The Debtor’s

primary purpose of this case was to discharge a sizable non-consumer judgment owed to MoSex,

his only major creditor. See id. (declaring the Debtor’s debts to be primarily non-consumer debts

and disclosing his only prepetition debts as the large debt owed to MoSex, a small credit card

balance, a moderate loan balance due to his parents, and a non-dischargeable student loan

obligation).

On April 19, 2019, MoSex filed a Motion to Dismiss Chapter 7 Petition and on May 31,

2019, filed its Amended Motion to Dismiss Chapter 7 Petition. ECF No. 18, 50 (together, the

“Motion to Dismiss”). The Motion to Dismiss argues that the Debtor’s pre- and post-petition

conduct, when combined with incomplete disclosures in his petition and other filings, establish

that cause exists to dismiss this case. See generally Mot. to Dismiss, ECF No. 50. MoSex contends

that before and after the filing of the Petition, the Debtor squandered his wealth and lived an

extravagant lifestyle rather than paying, at least in part, his sizeable debt to MoSex. In support of

this contention, MoSex points to the Debtor’s $16,000 in preferential payments made to his family

in the year prior to filing his Petition, his continued and unchanged spending habits to support what

it characterizes as a “lifestyle of indulgence,” and his failure to truthfully account for his income

and expenses in his schedules. Id. at ¶ 1. For these reasons, Mosex asserts that the Debtor’s

bankruptcy case should be dismissed under § 707(a) for cause, specifically bad faith. Id.

Prior to the COVID-19 pandemic, trial on the Motion to Dismiss was set for June 2020.

However, the COVID-19 pandemic combined with health issues of the Debtor resulted in a number

consensual of continuances of the trial, which was finally held on February 8, 2021. Upon

conclusion of the trial, the Court took the matter under advisement.

II. Facts

A. The MoSex Judgment

On or about July 31, 2015, Swimmers New York, LLC (“Swimmers”) entered into a

commercial lease with MoSex for a restaurant space in New York City (the “Lease”), which the

Debtor signed on behalf of MoSex as a “Partner”. See Pl.’s Ex. 28, at 3, 68.3 Concurrently, the

Debtor signed a personal guaranty of the Lease (the “Guaranty”). See Pl.’s Ex. 29. Under the terms

of the Lease, Swimmers’ first rental payment was due in December 2015, but the payment was

never made. See generally Pl.’s Exs. 13-15 (MoSex’s various eviction complaints). Though the

Debtor at various times stated under oath and penalty of perjury that this rent was paid via wire

transfer to MoSex, the Debtor acknowledged at trial the payment was not made. See e.g., Pl.’s Ex.

2 ¶ 6. Accordingly, MoSex began proceedings to terminate and enforce the terms of the Lease and

the Guaranty in the Supreme Court of the State of New York, County of New York (the “New

York Court”) in early 2016. See generally Pl.’s Exs. 13-15.4

3 MoSex’s exhibits are attached to ECF No. 121.

4 There was significant litigation in the New York Court, the details of which are not material to the issues herein, and

therefore, this opinion does not detail the entirety of those proceedings, only those relevant to the ultimate judgment

entered against the Debtor.

On September 8, 2016, the New York Court entered summary judgment against the Debtor

with respect to liability under the Lease and Guaranty, and on May 11, 2017, a judgment in the

amount of $431,127.00, plus $165,000.00 in attorneys’ fees and $49,431.96 of pre-judgment

interest on the principal amount from February 1, 2016, for a total of $645,558.96 (the

“Judgment”). Pl.’s Ex. 6, 9. In November 2017, after the Debtor relocated from New York to

Washington, D.C., MoSex registered the Judgment in the District of Columbia Superior Court (the

“Domestication”) and began collection efforts.5 Pl.’s Ex. 10. Shortly thereafter, the Debtor filed

his Petition.

B. The Debtor’s Background & Extravagant Lifestyle

Mr. Campbell is not a “stereotypical” chapter 7 debtor. He earned a bachelor’s degree from

Cornell University and a master’s degree from Columbia University. See Pl.’s Ex. 31. Since

completing his education, the Debtor has held multiple executive-level positions with six-figure

salaries.6 See Pl.’s Ex. 31; accord Pl.’s Ex. 52 (Debtor’s Production). For the two years prior to

the Petition Date, his combined scheduled income was $524,318.69. ECF No. 33. Mr. Campbell

has no dependents to support and lives (at a minimum) an upper-middle class lifestyle in downtown

Washington, D.C. See Schedule J, ECF No. 1. Prior to living in Washington, D.C., the Debtor

resided in New York City. Pl.’s Ex. 53 at 39:9, ECF No. 121.

The Debtor resides in an apartment in the downtown metropolitan D.C. area with a monthly

rent of $2,995.00, does not own a vehicle but incurs monthly scheduled transportation costs (i.e.

5 In order to domesticate the judgment, MoSex had to attempt service on the Debtor numerous times.

6 While high salaries are not prohibitive or preclusive of an individual filing a chapter 7 case, the Debtor’s filing

deviates from the “normal” case. See In re Snyder, 509 B.R. 945 (Bankr. D.N.M. 2014) (finding that, while the debtor

made over $290,000 a year, his chapter 7 filing was appropriate to relieve himself of non-consumer debts and protect

his retirement savings).

Uber, Lyft, Metro) of $1,200.00,7 owns a dog with scheduled monthly expenses of $600.00,

reported scheduled “food and housekeeping” of $1,200.00, and scheduled an additional $1,200.00

of “Business entertainment” as part of his overall scheduled monthly expenses of $9,550.00.8 In

addition, the Debtor belongs to The Metropolitan Club, a private club, with monthly dues of

$300.00 and additional meal costs, although it is not clear from the record whether the $1,200.00

food costs included such expenses. See Pl.’s Ex. 26, ECF No. 121 (detailing the Debtor’s monthly

dues to The Metropolitan Club). Based upon the evidence introduced at trial and the testimony of

the Debtor, it is clear that the Court cannot rely on the Debtor’s schedules as an accurate

representation of his actual spending or monthly expenses. Even discounting the inability to

account for a significant portion of the Debtor’s income due to cash expenditures, as discussed

below, a cursory review of the Debtor’s bank statements provides evidence of the Debtor’s

profligate spending habits. For example, one month prior to filing for bankruptcy, the Debtor spent

over the course of one day $489.20 at a restaurant, $118.23 in Uber trips, and $483.00 at a liquor

store. Pl.’s Ex. 18 at 204-5, ECF No. 121. In addition to dining out and transportation, other days

reflect multiple large purchases at high-end clothing and accessory stores.

In addition, notwithstanding the evidence introduced as to his actual spending, the Debtor’s

scheduled expenses include $1,000 monthly for student loan repayment, but at trial the Debtor

admitted that he did not, and had not for many years, make payments on his loans. The Debtor

argued that the un-paid payments were still a valid expense to be included in his schedules because

7 Due to the Debtor’s excessive cash usage, including testimony that he would use cash for cabs, it is entirely possible

his transportation costs exceed even the $1,200 included in his schedules.

8 As the Court notes below, the Debtor’s monthly spending is likely much higher given his scheduled budget surplus

but, due to the Debtor’s failure to keep records or recall any specific use of any of his cash withdrawals, these are the

only available figures in the record.

they were due.9 The Debtor’s failure to make the student loan payments either pre- or post-petition

while scheduling the same results in another $1,000 of unaccounted for actual spending by Debtor.

Even with the Debtor’s higher than average monthly living expenses (including the $1,000

attributed to student loan payments), the Debtor’s Schedule J lists a monthly budget surplus of

$3,157.10 See Debtor’s Pet., at 24-27 of 46 (Schedule I & J), ECF No. 1. However, neither the

Debtor’s schedules, monthly bank statements, or testimony at trial provide any accounting of the

spending of the surplus. At the same time, the Debtor does not have a steadily growing bank

account balance reflecting any savings thereof. See generally Pl.’s Exs. 18A & B (Aspect LLC’s

Monthly Bank Statements). The Debtor testified at trial that despite the lack of disclosure in his

official Schedules, he spent and continued to spend the scheduled surplus on what he vaguely

described “business-related expenses” (in addition to those actually scheduled) and “daily” on his

girlfriend. Much of the Debtor’s additional spending of any surplus is untraceable as the Debtor’s

spending is primarily through cash withdrawn from the bank and for which receipts or other

records were not maintained. Thus, all of the Debtor’s disclosures (filed under penalty of perjury)

indicate a monthly surplus, meaning the disclosures filed in this case were, and remain, inaccurate.

In arguing that this case should be dismissed for cause, MoSex points heavily to the

Debtor’s continued inability or refusal to explain the usage of the money obtained from his large

and frequent ATM cash withdrawals despite the requirements for full and complete disclosures of

9 Debtors have made similar, unpersuasive arguments with regard to scheduled car expenses even when the Debtor

did not own a car. Courts have repeatedly dismissed this position. A debtor’s ability to have an expense, or such as a

student loan, does not result in an allowable deduction if the cost is not actually incurred as an expense. See In re

Feagan, 549 B.R. 811, 815 (Bankr. N.D. Ga. 2016); In re Sires, 511 B.R. 719, 723 (Bankr. S.D. Ga. 2014); In re

Hardacre, 338 B.R. 718, 728 (Bankr. N.D. Tex. 2006).

10 Income from Schedule I of $12,707 less Schedule J expenses of $9,550. If the phantom student loan payments are

removed from his expenses, the Debtor’s surplus would rise to $4,157.

income and expenses. Even after a review of all of the evidence and testimony in this case, the

Court is unable to determine whether the use of the cash (i) is consistent with an honest, but

unfortunate debtor; (ii) created otherwise preferential or avoidable transfers; (iii) represented

excessive or otherwise impermissible spending for a chapter 7 debtor; or (iv) make any other

interpretation or inference (positive or negative) therefrom.

What is clear from the record is that the Debtor made nearly 1,000 ATM withdraws over

53 months. See Pl.’s Ex. 17 (Spreadsheet of Debtor’s Bank Transactions). Notably, between

January 2015 to May 2019, the Debtor withdrew an average of $3,966.59 from ATMs every

month, without any record of the disposition or use of the funds. The Court finds it significant that

the Debtor’s scheduled budget surplus is less than $200.00 different than his average ATM

withdrawal total. Even more concerning is the Debtor’s pattern and usage of the withdrawn cash

without any accounting continued seemingly unabated post-petition. See Pl.’s Ex. 53, Debtor’s

Dep. at 139-48 (wherein the Debtor testified to withdrawing a couple hundred dollars the night

before the deposition but could not, or would not, explain what he did with that money). Even at

trial, the Debtor continued to only provide a high-level explanation for his pattern of ATM

withdrawals as necessary for “various business and personal expenses”, but declined upon multiple

rounds of questioning to provide details for any specific ATM withdrawal, batches of withdrawals,

or even a more detailed list of uses. Instead, the Court is left to speculate just what those “business

and personal expenses” might entail, how they might affect or alter his filed schedules, and what

actually happened to approximately 25 percent of his monthly income. The Debtor’s lack of candor

to the Court at trial and in his schedules combined with his failure to even attempt to provide any

details as to the use of his cash significantly undermines the credibility of his testimony, which the

Court takes into consideration when evaluating whether or not cause exists to dismiss this case.

C. The Debtor’s Pre-Petition Payments to Insiders

Pre-petition the Debtor received significant financial support from his family. In his

amended Schedules and Statement of Financial Affairs, the Debtor indicated that as far back as

“mid-2015” his parents lent him $50,000 “on a revolving credit line basis” to support him while

he was between jobs. See Debtor’s Witness List Ex. B, ECF No. 116. At trial, no contract or any

other any writing establishing or setting forth the terms of the purported loan(s) was introduced.

Rather, the Debtor merely offered a “Loan Payment History” reflecting amounts loaned from and

repayments made to his parents beginning on December 17, 2017— after the Domestication of the

MoSex Judgment. See id. Ex. A, ECF No. 115.11 No evidence or testimony was introduced setting

for any loan or repayment history for the familial loan prior to December 17, 2017. Based upon

the payment history and testimony at trial, the Debtor’s practice, post-Domestication, was to pay

his parents an average of $1,000 each month without consistency as “loan repayments,” apparently

when he had “extra” money. See id. In reality, the payment history details that in some months the

Debtor made no payment while in others he paid as much as $6,000. Id.

Despite the outstanding $30,000 allegedly owed to his parents in September 2018, the

Debtor borrowed an additional $12,000 from his parents over the four months immediately prior

to filing his Petition, while concurrently paying them back $9,000. Id. In addition, the Debtor also

paid his parents a total of $7,000 between four- and twelve-months pre-petition, for total payment

of $16,000 during the 1-year insider preference period. Id. The Debtor’s amended Schedules

disclosed a net $3,000 in preferential payments to Vicki Campbell during the 90-day non-insider

11 The Court notes, however, that the Debtor and both of his parents tended to corroborate these “bridge loans” during

their depositions which were admitted into evidence. See Pl.’s Ex. 53, at 49:22-50:2 (Mrs. Campbell’s Deposition).

Accord Pl.’s Ex. 54, at 41:23-25 (Mr. Campbell’s Deposition); Pl.’s Ex. 55, at 133-35, 208-10, 23-39 (Debtor’s

Deposition).

preference period, though the Debtor’s counsel later identified the preferential amount as $4,000

See ECF No. 33, Ex. B. While the actual amounts are not determinative, the Debtor’s decision to

make significant payments to an insider in the months immediately pre-petition in lieu of paying

on the Judgment combined with his extravagant spending, is material in evaluating whether the

Debtor filed this case in bad faith.

III. Legal Standard

A. Bad Faith as Cause for Dismissal under § 707(a)

“The principal purpose of the Bankruptcy Code is to grant a ‘fresh start’ to the ‘honest but

unfortunate debtor.’” Marrama v. Citizens Bank, 549 U.S. 365, 367 (2007) (quoting Grogan v.

Garner, 498 U.S. 279, 286, 287 (1991)). Inherent in the concept of the ‘honest debtor’ are the

attributes of “[g]ood faith and candor,” which “are necessary prerequisites” to any bankruptcy

filing. In re Zick, 931 F.2d 1124, 1129–30 (6th Cir. 1991). A chapter 7 case may be dismissed

upon the motion of a creditor under § 707. See In re Fleurantin, 420 F. App'x 194, 197 (3d Cir.

2011). In the case of a debtor with primarily non-consumer debts, the only basis for dismissal is

under § 707(a), for cause. Piazza v. Nueterra Healthcare Physical Therapy, LLC (In re Piazza),

719 F.3d 1253, 1266 (11th Cir. 2013).12 Section 707(a) and provides a non-exhaustive list of three

types of cause in a non-primarily consumer debts case: (1) unreasonable delay by the debtor; (2)

nonpayment of fees or charges; and (3) failure to comply with § 521(a) requirements. 11 U.S.C. §

707(a); Innovative Bldg. Sols., LLC v. Moser (In re Moser), 628 B.R. 756, 763 (Bankr. W.D. Pa.

2021). However, bankruptcy courts “routinely treat dismissal for prepetition bad-faith conduct as

implicitly authorized by the words ‘for cause.’” Marrama, 549 U.S. at 373. In addition, each circuit

12 Dismissals pursuant to § 707(b), as amended by Congress in the Bankruptcy Abuse Prevention and Consumer

Protection Act of 2005, are limited to cases where the debtor’s debts are primarily consumer debts as defined by 11

U.S.C. § 101(8).

court that has addressed the question has found that bad faith to continues to be cause for dismissal

under § 707(a) after the BAPCPA amendments to § 707(b). See In re Piazza, 719 F.3d at 1260-61

(“[T]he power to dismiss ‘for cause’ in § 707(a) includes the power to involuntarily dismiss a

Chapter 7 case based on prepetition bad faith.”); In re Zick, 931 F.2d 1124, 1127 (6th Cir. 1991)

(“[L]ack of good faith is a valid basis of decision in a ‘for cause’ dismissal by a bankruptcy

court.”); Krueger v. Torres (In re Krueger), 812 F.3d 365, 370 (5th Cir. 2016) (“[A] debtor’s bad

faith in the bankruptcy process can serve as the basis of a dismissal ‘for cause’ . . . .”); Perlin v.

Hitachi Capital Am. Corp. (In re Perlin), 497 F.3d 364 (3d Cir. 2007); see, e.g., In re Tamecki,

229 F.3d 205, 207 (3d Cir. 2000) (“Section 707(a) allows a bankruptcy court to dismiss a petition

for cause if the petitioner fails to demonstrate his good faith in filing.”); Janvey, 883 F.3d at 412

(“[T]he majority view is the sounder one, because it is the most helpful in preventing serious

abuses of the bankruptcy process.”); In re Schwartz, 799 F.3d 760, 764 (7th Cir. 2015) (agreeing

“with the cases that allow ‘for cause’ to embrace conduct that . . . avoids repayment of debt without

an adequate reason” but noting with disapproval that such “cases often use ‘bad faith’ to denote

‘cause’ for dismissing a bankruptcy petition . . . but we can't see what is gained by the

terminological substitution”).

“The concept of bad faith ‘does not lend itself to a strict formula,’” Janvey, 883 F.3d at 412

(quoting Piazza, 719 F.3d at 1271), and “[c]ourts must consider the totality of the circumstances

underlying each case to determine whether a debtor has acted in bad faith.” Id. A decision to

dismiss for cause is discretionary and guided by equitable principles. Smith v. Geltzer, 507 F.3d

64, 73 (2d Cir. 2007) (citing In re Hull, 339 B.R. 304, 308 (Bankr. E.D.N.Y. 2006) (finding that a

bankruptcy court has substantial discretion in ruling on § 707(a) motions to dismiss)). In other

words:

Dismissal based on lack of good faith must be undertaken on an ad hoc basis. It

should be confined carefully and is generally utilized only in those egregious cases

that entail concealed or misrepresented assets and/or sources of income, and

excessive and continued expenditures, lavish lifestyle, and intention to avoid a large

single debt based on conduct akin to fraud, misconduct, or gross negligence.

Zick, 931 F.2d at 1129 (citation omitted).

In order to identify the circumstances that are likely to be relevant in such a totality of the

circumstances determination, courts have developed a number of multi-factor tests listing

examples of conduct that may constitute bad faith. Janvey, 883 F.3d at 412 (citing examples). After

a thorough review of the majority of the multi-factor tests, the following factors stand out to this

Court as those most relevant and appropriate to a totality of the circumstances determination under

§ 707(a):

(1) the improper or unexplained transfers of assets prior to filing;

(2) the debtor's lack of candor and completeness in statements and schedules, such as

misstatements of assets, income or expenses to disguise financial condition of debtor or

estate;

(3) the debtor has sufficient resources to repay debt(s) that stand to be discharged;

(4) the debtor failed to attempt to repay creditors, despite having means to do so;

(5) the debtor maintains a lavish lifestyle, with excessive expenditures;

(6) the debtor’s use of bankruptcy relief would be unfair to creditors and inconsistent

with the fundamental purpose of bankruptcy to afford a fresh start to an honest but

unfortunate debtor, including, but not limited to whether:

(a) the debtor's petition is part of a pattern to evade a single creditor;

(b) the debtor paid all but one creditor prior to filing the petition; and

(c) the debtor paid insider creditors prior to filing the petition.13

As with each of the multi-factor tests utilized in other cases, no one factor herein is determinative.

Essentially, the factors assist the court in determining whether, under the totality of the

13 See Piazza, 719 F.3d at 1273-74 (the debtor’s bankruptcy filing was designed to avoid the payment of a single large

debt while continuing to pay insiders); McDow, 295 B.R. at 74 (a debtor’s failure to pay fee, meet deadlines, payments

to insider creditors, and unreasonable delay weigh in favor of a dismissal due to bad faith); In re Lombardo, 370 B.R.

506, 512 (Bankr. E.D.N.Y. 2007); In re Aiello, 428 B.R. 296, 302 (Bankr. E.D.N.Y. 2010); In re Cisneros, No. 21-

12338, 2021 LEXIS 2324 at *16 (Bankr. D. Md. 2021) (citing the McDow factors).

circumstances, a debtor’s actions violate the spirit of the Code’s fresh start. See Am. Zurich Ins.

Co. v. Hardin (In re Hardin), 616 B.R. 198, 207 (Bankr. N.D. Ga. 2020).

B. Cause Exists to Dismiss this Case for Bad Faith

In conducting its totality of the circumstances analysis under § 707(a), the Court applies

each of the bad faith factors enumerated supra to the facts and circumstances of the Debtor’s case.

In order to find bad faith, the Court need not find all factors applicable, but must weigh each within

the specific context of the case. In order to find bad faith, the Court need not find all factors

applicable, but must weigh each within the specific context of the case. Based upon the analysis

of the factors, the Court finds that each of the enumerated factors weighs in favor of a finding of

bad faith and, therefore, cause exists to dismiss this case under § 707(a).

i. Improper or Unexplained Pre-Petition Transfers

Many questions still exist surrounding the Debtor’s reasoning and pattern of making mostly

daily, if not multiple times a day, cash withdrawals prior to his bankruptcy filing.14 The Debtor

withdrew, on average, $3,966.59 per month with no recordation or explanation of where this

money went. See Pl.’s Ex. 17, ECF No. 121. In addition to these ATM withdrawals, the Debtor

made $16,000.00 in preferential payments to his mother on his familial loan in the year

immediately preceding the filing of his chapter 7 petition. See Debtor’s Witness List Ex. A, ECF

No. 115. Undoubtedly there was no urgency for his mother to receive this money as his family

simultaneously loaned the Debtor an additional $12,000.00 and had been loaning the Debtor

money for more than three years prior. See id. The Debtor made these payments to his mother all

the while eluding payment on and collection efforts by MoSex on the Judgment. In addition, the

14 The Court notes that the Debtor continued to make these withdrawals post-petition but, for the purposes of this

prong of the analysis, such actions are not relevant.

Court can only infer from the Debtor’s lack of candor with respect to the use and disposition of

the cash withdrawals, that there is a significant possibility that part of those funds were also used,

at a minimum in part, for improper purposes. When combined with the Debtor’s payments to an

insider, his mother, immediately preceding his bankruptcy filing, and after consideration of all the

relevant evidence, this factor weighs in favor of a finding of bad faith § 707(a). See In re Woody,

578 B.R. 739, 746 (Bankr. M.D.N.C. 2017); In re O’Brien, 328 B.R. 669, 675 (Bankr. W.D.N.Y.

2005); see also In re Brown, 88 B.R. 280, 284 (Bankr. D. Hawaii 1988) (finding a lack of good

faith where the debtor transferred business profits to avoid paying a judgment).

ii. The Debtor’s Lack of Candor in his Filings

The Court has detailed extensively, supra, the material misstatements and omissions from

the Debtor’s schedules and statements regarding his student loan payments and use/disposition of

his cash withdrawals. Despite the inaccuracies in the filings, the Court provided the Debtor with

multiple opportunities at trial to further explain or clarify his filings, and he failed to provide any

further information or detail. Thus, the Debtor’s failure to keep adequate records, combined with

the admitted inaccuracies in his Schedules, demonstrates clear lack of candor by the Debtor in his

filings and weighs in favor of a finding of bad faith. See In re Johnson, 546 B.R. 83, 159 (Bankr.

S.D. Ohio 2016).

iii. The Sufficiency of the Debtor’s Resources to Repay Debts

The Debtor is a healthy, ivy league educated man with no dependents who routinely had

six-figure annual income. For example, the Debtor’s annual income for 2018, the year immediately

preceding his bankruptcy filing, was $299,106.12. Debtor’s Pet., ECF No. 1. Further, in his sworn

schedules with the Court, the Debtor’s indicated a monthly surplus of $3,157.00 even after

application of above-average expense.15 The Court need look no further than the Debtor’s own

sworn statements to determine that, on paper, the Debtor clearly has the ability to repay his debts.

In lieu of dedicating his surplus income to satisfying his debts, the Debtor instead apparently spent

the money via a series of regular, large, untraceable and unaccounted cash withdrawals. This factor

clearly weighs in favor of a finding of bad faith. In re Blumenberg, 263 B.R. at 715.

iv. The Debtor’s Failure to Attempt to Repay Creditors

At the time of his bankruptcy filing, the Debtor had been aware of the $645,558.96

Judgment for almost two years having participated in the New York Court and apparently having

taken affirmative efforts to avoid service of collection documents. In that time, the Debtor made

no payments on his debt to Mosex and, instead, chose to pay off family debts and engage in

excessive spending. See Pl.’s Ex. 17, ECF No. 121. Unlike MoSex, the Debtor had no problem

paying his familial loan. Had the Debtor’s practice from the initial loan agreement to petition date

been that of his reported pattern spanning from December 2017 to May 2019 (paying $1,000.00 a

month), the Debtor may have paid about $40,000.00 to his family by the petition date—not only

$16,000.00 disclosed in the Loan Payment History. See Debtor’s Ex. B (assuming “mid-2015”

means June or July). Without any evidence the Court can only infer that at least one of the

following may have happened: (1) the Debtor began paying his family loan with greater fervor

post-Domestication than he had pre-Domestication or (2) the Debtor borrowed far more money

than the initial purported $50,000.00 on a “revolving door” basis pre-Domestication that he only

began to pay back post-Domestication. In either event, the Debtor clearly chose to make payments

only to his familial debt, to the exclusion of MoSex.

15 Had the Debtor been truthful in his schedules and omitted the student loan payment of $1,000, his Schedules would

accurately reflect a $4,157 monthly surplus.

Additionally, despite conceding their validity, the Debtor claimed he “did not know how

to make payments” and simply chose not to make payments towards his other significant debt -

his student loans. Unlike the familial loans, the student loans are a nondischargeable obligation

under 11 U.S.C. § 523(a)(8). Thus, the Debtor’s choice to pay his familial loans instead of a

nondischargeable obligation in the months preceding the filing of this case also shows an

unmistakable affirmative choice to pay his insider debts over other obligations, even when in the

“zone of insolvency”. See 11 U.S.C. § 547(f) (“the debtor is presumed to have been insolvent on

and during the 90 days immediately preceding the date of the filing of a petition”). The Debtor’s

clear lack of any payments on legitimate third-party debts makes it clear that this factor weighs in

favor of a finding of bad faith.

v. The Debtor’s Lavish Lifestyle

As detailed above, the Debtor resides in a high-end apartment, maintains an expensive pet,

choses private transportation over public transportation, spends a minimum of $1,200 per month

($40/day) on food including dining out frequently and private club memberships, and incurs an

equal amount in uncategorized or described “business expenses.” All of that before considering

the remaining unanswered question of where close to $4,000 per month in cash is spent. The record

clearly establishes that despite filing for chapter 7 the Debtor has made no lifestyle changes after

filing his petition. Indeed, the Debtor’s spending history contained in the record demonstrates his

propensity for lavish purchases, amenities and injudiciously spending thousands of dollars of cash

a month. While these facts alone may+ not sufficient to establish bad faith, they clearly establish

that he was and is capable of making payments to MoSex and instead used such funds to fund a

lavish, if not extravagant, lifestyle. See Piazza, 719 F.3d at 1260. This factor weighs heavily in

favor of a finding of bad faith.

vi. Fairness to Creditors in Allowing the Debtor to Utilize Bankruptcy Remedies

At trial, it became evident that, were it not for MoSex’s Judgment, the Debtor would not

have filed for bankruptcy. In filing for bankruptcy, the Debtor hoped to impermissibly use the

bankruptcy system to avoid the payment of one debt: the Judgment. See Janvey v. Romero, 883

F.3d at 412. As such, this stated sole motivation for filing his petition is not one of an “honest but

unfortunate debtor,” but rather, a debtor hoping to avoid paying a single judgment while

maintaining the remainder of his extravagant lifestyle. Grogan, 498 U.S. at 287. In addition to his

stated motivations for filing, the Debtor chose to repay his familial loans in lieu of making

payments on the Judgement, to purchase numerous luxury goods, to travel and eat out in expensive

restaurants. Indeed, the Debtor’s payments to his mother constitute insider payments, another

factor signifying bad faith in filing for bankruptcy. See In re O’Brien, 328 B.R. 669, 675 (Bankr.

W.D.N.Y. 2005). As the Court started its analysis with, bankruptcy is intended for the honest but

unfortunate debtor, as evidenced by the Debtor’s actions both pre- and post-petition, this Debtor

is anything but. This factor clearly weighs in favor of a finding of bad faith.

IV. Conclusion

If anything is clear from the totality of the circumstances and record in this case, it is that the

Debtor is anything but the “honest but unfortunate” debtor for which bankruptcy is intended. An

analysis of each of the factors to identified for the Court to consider in evaluating whether a chapter

7 case was filed in bad faith weighs in favor of a finding that this case was filed in bad faith. The

Debtor’s lack of candor in both his written pleadings and at trial, the payments to insiders, but

particularly the Debtor’s unfettered, extravagant spending, further support the Court’s conclusion.

There was nothing honest nor unfortunate about the Debtor either pre- or post-petition.

Therefore, based upon the foregoing, the Court finds that the Debtor acted in bad faith in filing

the instant chapter 7 petition and, accordingly, GRANTS MoSex’s Motion to Dismiss pursuant to

11 U.S.C. § 707(a).

[Signed and dated above.]

Copy to: the Debtor; all counsel of record