Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Daniel Gill
A Pennsylvania man can wipe out his gambling debts owed to Las Vegas and Atlantic City, N.J., casinos in bankruptcy, a bankruptcy judge ruled Sept. 11 ( Wynn Las Vegas, LLC v. Anandani (In re Anandani) , 2017 BL 318873, Bankr. E.D. Pa., Case No. 16-10533, Adv. No. 16-224, 9/11/17 ).
Rakesh D. Anandani intended to pay back his gambling debts when he incurred them and didn’t defraud the casinos, the opinion by Judge Richard E. Fehling, of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, found. Nor was he willful or malicious when he borrowed the money, the court said.
Anandani received lines of credit from Golden Nugget casinos in Atlantic City, N.J., and Las Vegas, the court said.
Up until Aug. 2015, Anandani frequently used the lines of credit, each time borrowing $100,000, and he repaid each of the advances on time.
But Anandani’s luck eventually ran out, and he found himself unable to pay off the gambling debts. When his wife found out about his debts, she filed for divorce and moved to freeze their marital property.
Anandani was unable to pay off his debts after the divorce, which left him with almost no property but all the gambling debt.
The casinos referred the case to the Nevada district attorney to pursue criminal charges, and Anandani filed a Chapter 7 case.
In Chapter 7, a debtor’s nonexempt assets, those he cannot keep, are liquidated by a trustee, and the proceeds are distributed to creditors. Subject to certain exceptions, the debtor is awarded a discharge, effectively wiping out his debts.
The casinos sought to avoid the discharge, but didn’t prove that Anandani hadn’t intended to pay back his gambling debts when he drew down on his lines of credit. He therefore didn’t incur the debts by fraud or misrepresentation.
The fact that he later lied about his ability to repay the debts didn’t change the analysis, the court said.
The casinos also failed to show that Anandani purposely inflicted an injury on them, or knew that his actions were substantially certain to cause them injury, the court said.
Aaron S. Applebaum, Philadelphia, represented the casinos. Anandani was represented by John R.K. Solt, Bethlehem, Pa.
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To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
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