SE Property Holdings, LLC, as Successor by Merger to Vision Bank v. Jerry D. Gaddy

This case involves two important issues of bankruptcy law designed to protect only the “honest but unfortunate debtor.” See Grogan v. Garner, 498 U.S. 279, 286-87 (1991). The first issue, involving the exception to discharge found at 11 U.S.C. § 523(a)(2)(A), implicates a Circuit split and this Court’s ruling in Husky International Electronics, Inc. v. Ritz, 136 S.Ct. 1581 (2016). Granting SEPH’s petition would offer the Court an opportunity to clarify Husky in light of inconsistent interpretations of Husky by the Circuit Courts of Appeal. The second issue, also involving 11 U.S.C. § 523(a)(2)(A), implicates a Circuit split and runs counter to this Court’s precedent. THE QUESTIONS PRESENTED ARE:

1. Does a creditor sufficiently state a claim under 11 U.S.C. § 523(a)(2)(A) to except from discharge a debt “for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by . . . actual fraud” where the creditor alleges that the debtor fraudulently transferred assets while receiving post-transfer benefits derived from those assets?

2. Can a creditor to whom the debtor owes an underlying debt state a claim under 11 U.S.C. § 523(a) (2)(A) where the creditor seeks non-discharge “to the extent of [debtor’s fraud]” and alleges that after incurring the underlying debt, the debtor engaged in a pattern of fraudulent transfers to hinder, delay, and defraud the creditor?