The Trustee sought approval of an in-bankruptcy Division I Amended Proposal for the Debtor.
The Office of the Superintendent in Bankruptcy (OSB) opposed the approval, citing a complete lack of disclosure and untruths by the Debtor throughout the bankruptcy process, including her second bankruptcy.
The court applied the three-pronged test for proposal approval (reasonableness, benefit to creditors, good faith) and considered the public interest in the integrity of the bankruptcy system.
Despite 100% creditor approval, the court found the Debtor failed to meet her disclosure responsibilities, particularly regarding income, assets, and the use of credit for gambling and alleged medical expenses, and inconsistencies regarding her marital status and property transfers.
The court concluded that approving the proposal would not uphold the integrity of the bankruptcy system and dismissed the motion.
