Debt Declared Nondischargeable

August, 2023

John Stockdale, Jr., representing a lender, obtained an order declaring a debt owed by an individual chapter 13 business debtor to the lender nondischargeable and implementing a repayment plan.  The debtor owned a Korean grocer that suddenly closed leaving the lender to scramble to liquidate its perishable assets.  Preliminary discovery revealed that the debtor had obtained merchant cash advances without lender’s approval and the proceeds were not used to pay the lender. Rather, lender suspected debtor conspired to violate its loan documents with the MCAs and funneled the proceeds into its personal account.  After creating significant leverage in the bankruptcy case, lender and debtor stipulated that the debt was nondischargeable and to repayment of that debt from nonexempt assets.