Two years ago, Dave obtained a loan from National Bank for $200,000 to start a pet boarding business. Dave lives in Florida. In his loan application, Dave stated he owned a restaurant which was actually owned by his father . Dave personally guaranteed the loan. Dave owns a $500,000 house with no mortgage.
Six months ago, when Dave’s business was struggling to keep afloat, Dave borrowed $10,000 from his mother Molly to pay past due amounts to some of his creditors, including National Bank. Dave also made sure to be current to National Grid, paying $500 per month for electricity. Two months ago, anticipating the business’ failure, Dave paid back the $10,000 to his mother, depleting most of his working capital. Another creditor, Jack’s Dog Food (“Jack’s”), extended credit to Dave on numerous purchases. Jack’s pressured Dave for payment. One month ago, Dave paid Jack’s $1,000, which was half the amount owed. Two weeks ago, Dave transferred his $20,000 boat to his brother Bob for $100.
Dave voluntarily petitioned himself into bankruptcy, seeking discharge from his National Bank loan. After he filed the bank immediately began to pursue legal methods to collect the money Dave owned it. Dave has been suffering from depression and has not been taking care of the pets, contributing to the business’ downward spiral. Dave filed the bankruptcy petition in state court, in Monroe County, Rochester, New York. Dave neglected to declare that he has $ 500,000 in a Mexican Bank Account. National Bank is prepared to ask a court to deny Dave a discharge in bankruptcy, but to also ask that if Dave is granted his petition, he be forced to turn over to the bankruptcy trustee the amounts paid to Molly, National Grid, and Jack’s. National Bank also wants the trustee to void Dave’s boat transfer to his brother Bob.
What will Dave argue? What will National Bank argue? How will the court rule on this case? Provide justification for your decision.