. . . failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained. . . .”

The fundamental policy underlying Section 727(a)(3) is to insure that the trustee and the creditors receive sufficient information to effectively enable them ‘to trace the debtor’s financial history, to ascertain the debtor’s financial condition, and to reconstruct the debtor’s business transactions.'”

Additionally, an intent to conceal one’s financial condition is no longer a prerequisite to support an objection to discharge.

In the case of Paul Krohn (as Trustee in Bankruptcy) v. Anne Frommann, 153 B.R. 113, debtor operated a business prior to filing an individual Chapter 7 bankruptcy. Debtor testified at the first meeting of creditors that she would provide the business records to the Trustee: debtor only provided bills, cancelled checks, bank statements and closing statements, while failing to provide the Trustee with the books of account.

The court found that the records produced by debtor were not sufficient to permit the Trustee to ascertain her financial condition. Debtor’s records consisted of the underlying documents that would normally be utilized to compile the books of account, but the court noted that “a debtor cannot simply place stacks of records before the bankruptcy judge or trustee to sift through the documents and attempt to reconstruct the flow of the debtor’s assets.”

The debtor must supply records adequate to allow the Trustee, creditors and the court to meaningfully reconstruct debtor’s financial condition.

Court Ruling: Discharge denied.

Author: Charles R. Harroun, Attorney at Law