## Facts

- Robert W. McNamara filed a Chapter 7 bankruptcy petition.
- In 1998, McNamara made numerous bank withdrawals and accumulated $150,000 in cash, which he kept in a briefcase.
- In a pending divorce action, a Connecticut state court ordered McNamara to deposit $150,000 into an escrow account pending the divorce outcome.
- McNamara did not comply with the escrow order; after a capias issued, he was arrested and claimed he no longer had the money.
- In the bankruptcy adversary proceeding, the Chapter 7 trustee sought denial of discharge under 11 U.S.C. § 727(a)(2)(A), (a)(3), and (a)(5), focusing on the missing $150,000.
- At trial, McNamara was the only witness and testified that he lost $130,000 in a private, winner-take-all poker game in Brooklyn immediately after the escrow order.
- McNamara provided no identifying details (location, participants) and no corroboration of the poker game, and claimed impaired memory due to alcohol, medication, depression, and recent medical issues without supporting evidence.
- McNamara testified he used roughly $20,000 for a Caribbean vacation, supported in part by receipts.

## Issues

1. Whether McNamara, within one year of bankruptcy, transferred, removed, or concealed property with intent to hinder, delay, or defraud creditors (or another interested party), warranting denial of discharge under 11 U.S.C. § 727(a)(2)(A).
2. Whether McNamara failed to explain satisfactorily the loss or deficiency of assets (the missing $150,000), warranting denial of discharge under 11 U.S.C. § 727(a)(5).
3. Whether McNamara’s recordkeeping failures warranted denial of discharge under 11 U.S.C. § 727(a)(3), or whether that ground was rendered moot by other rulings.

## Decision

- The court denied McNamara’s Chapter 7 discharge under 11 U.S.C. § 727(a)(2)(A).
- The court denied McNamara’s Chapter 7 discharge under 11 U.S.C. § 727(a)(5).
- The court did not decide the § 727(a)(3) claim, treating it as moot given the denial of discharge on other grounds.

## Legal Principles

- Under 11 U.S.C. § 727(a)(2)(A), discharge may be denied if the debtor, within one year before filing, transferred, removed, or concealed property with intent to hinder, delay, or defraud creditors; intent may be inferred from circumstantial evidence, including timing, conduct, and credibility.
- A debtor’s conversion of funds to cash, noncompliance with a court-ordered restriction on funds, and an implausible, uncorroborated account of disposition can support an inference of concealment and improper intent under § 727(a)(2)(A).
- Under 11 U.S.C. § 727(a)(5), discharge may be denied when the debtor fails to explain satisfactorily a loss or deficiency of assets; the explanation must be credible and sufficiently supported, not vague or implausible.
- An unsupported claim that substantial assets were lost gambling, without verifiable details or corroboration, can be inadequate to satisfy § 727(a)(5).

## Conclusion

The bankruptcy court denied discharge because the debtor’s handling of the $150,000—its withdrawal into cash, failure to escrow it as ordered, and an uncorroborated gambling-loss story—supported a finding of concealment with improper intent and an unsatisfactory explanation for the asset’s disappearance.


In re McNamara, 310 B.R. 664 (Bankr. D. Conn. 2004)