## Facts

- Gary and Dianne Landry filed a Chapter 7 petition and later received a discharge.
- In their initial schedules, the debtors disclosed two automobiles but omitted a 1999 Harley-Davidson motorcycle.
- Before discharge entered, the Chapter 7 trustee received an anonymous letter alleging the debtors were concealing a motorcycle, but the trustee did not pursue the allegation at that time.
- After discharge, the trustee inquired about the motorcycle; the debtors amended their schedules to disclose it and claimed it as exempt.
- The trustee objected to the exemption; the court sustained the objection, ordered turnover, and the motorcycle was sold with proceeds distributed to creditors.
- The trustee then filed an adversary complaint seeking revocation of discharge under 11 U.S.C. § 727(d)(1), alleging the discharge was obtained through the debtors’ fraud and that the trustee did not learn of the fraud until after discharge.

## Issues

1. Whether a trustee may revoke a Chapter 7 discharge under 11 U.S.C. § 727(d)(1) when the trustee had pre-discharge notice of the alleged fraud (concealment of an asset) but did not act until after discharge.
2. Whether the trustee proved the statutory elements of § 727(d)(1): (a) the discharge was obtained through the debtor’s fraud, and (b) the requesting party did not know of the fraud until after the discharge was granted.

## Decision

- The court dismissed the trustee’s § 727(d)(1) complaint and declined to revoke the discharge.
- The trustee failed to satisfy § 727(d)(1)’s “did not know” requirement because the anonymous letter provided pre-discharge notice of the alleged concealment.
- Because the statute is conjunctive, the failure to prove lack of pre-discharge knowledge barred revocation regardless of whether the conduct could constitute fraud.

## Legal Principles

- Under 11 U.S.C. § 727(d)(1), discharge revocation requires proof that (1) the discharge was obtained through the debtor’s fraud and (2) the requesting party did not know of the fraud until after discharge.
- The plaintiff seeking revocation bears the burden of proving both statutory elements.
- Revocation of discharge is an extraordinary remedy and is construed strictly against the party seeking revocation.
- Pre-discharge information sufficient to trigger investigation constitutes knowledge (or at least defeats the claim of lack of knowledge) for purposes of § 727(d)(1), even if the trustee does not act on it until later.
- If a trustee has notice of potential misconduct before discharge, the proper remedy is generally to investigate promptly and, if warranted, object to discharge under § 727(a) before discharge is entered rather than relying on post-discharge revocation.

## Conclusion

The court refused to revoke the debtors’ discharge because § 727(d)(1) requires the trustee to lack knowledge of the alleged fraud until after discharge, and the trustee’s pre-discharge receipt of an anonymous letter about the concealed motorcycle defeated that element.


In re Landry, 350 B.R. 51 (Bankr. E.D. La. 2006)