Confidential
Settlement – $0Facts
The plaintiff, a California bank, filed an adversary complaint in the Chapter 7 bankruptcy of James and Aileen
Chung seeking a determination that the bankÆs claims survived the Chapter 7 filing as a nondischargeable debt
and seeking that the Chungs be denied their Chapter 7 discharge.
The background to the relationship between the plaintiff and the Chungs relates to October 1998 when the
Chungs contacted the plaintiff bank in order to negotiate loans for their business, Avant Industries Inc. Over a
period of time, the ChungsÆ indebtedness to the plaintiff reached a figure in excess of $600,000. To support
their requests for loans and increased credits, the Chungs supplied the bank with financial information relating
to their business. The Chungs also completed personal financial statements in connection with their personal
guarantee to the plaintiff in support of its loans to Avant Industries, Inc.
On July 12, 2001, the Chungs filed for relief under Chapter 7 of the Bankruptcy Code.
The plaintiff filed a complaint within the bankruptcy proceedings seeking a determination that the
loans were nondischargeable based on fraud and seeking that the Chungs be denied their
bankruptcy discharge.
Other Information
The matter was resolved via a stipulated judgment for nondischargeability in the amount of $699,000 with execution of the judgment stayed so long as the defendants pay a total of $100,000 to the plaintiff on or before Feb. 3, 2003. The plaintiffÆs request that the Chungs be denied their bankruptcy discharge was dismissed in accordance with the Federal Rules of Bankruptcy Procedure Rule 8041(2).
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