A debtor, along with her then-husband, obtained a loan from the lender for two of their businesses. The lender alleged that the loans were obtained based on fraud and false financial statements. The debtor, now divorced, filed for bankruptcy individually, and the lender sought to exempt the loans from discharge. Specifically, the lender pursued three causes of action, two of which were brought under 11 U.S.C. §523(a)(2) that alleged the funds were obtained under false pretenses and in reliance on false financial statements; the third cause of action was brought under 11 U.S.C. 523(a)(6) and alleged the funds were misappropriated and decreased the value of the lender’s collateral. The debtor challenged the timing of the complaint and moved to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6).
In Oklahoma Heritage Bank v. Van Horn (In re Van Horn), Nos. 24-80426-PRT, 24-8014-PRT, 2025 WL 271281, 2025 Bankr. LEXIS 109 (Bankr. E.D. Okla. January 22, 2025) (opinion not yet released for publication), the court found that the complaint was timely filed and met the standard to overcome a failure to state a claim challenge. The court reviewed the timeline of the filing and found that an extension to file the complaint had been granted, and the complaint was filed within that extension. The court then reviewed the lender’s complaint, which included very specific facts and exhibits to support its claim. For example, the complaint included 24 specific transactions in which the funds intended for the business were used for personal expenses, along with the dates, amounts, and creditors who were actually paid. Additionally, the complaint contained copies of financial statements provided to the lender that were alleged to be false. When the court viewed the complaint in the light most favorable to the lender, it found that it survived a 12(b)(6) motion to dismiss for failure to state a claim.
By Ashley Boyce, [email protected]
Edited By Maycee Redfearn, [email protected]
Edited By Hayden Mariott, [email protected]