Sullivan v. Glenn

(7th Cir. Apr. 2, 2015)

The Seventh Circuit affirms the bankruptcy court’s decision that a debt found nondischargeable in an agent’s bankruptcy is not necessarily nondischargeable in the principal’s bankruptcy. The debtor’s loan broker had obtained a $250,000 loan for the debtor from the broker’s friend by misrepresenting that a bank had approved a $1 million line of credit for the debtor which would be used to pay back the loan in a few weeks. The debtor was not aware of the misrepresentation. The loan broker and the debtor gave promissory notes to the lender. Both the broker and the debtor filed bankruptcies. The debt was held nondischargeable in the broker’s bankruptcy. The lender argued in the debtor’s bankruptcy that because the debt was obtained by fraud, it could not be discharged by the debtor, even if he had no knowledge of the fraud. The court holds that, absent any showing that the debtor knew or should have known of the fraud, the debt was properly discharged in the debtor’s bankruptcy. Opinion below.

2015-04-02 – sullivan v glenn

Author: Matt Lindblom

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