- 7 -
On March 28, 1989, a Discharge Order was issued with respect
to petitioner’s chapter 7 bankruptcy proceeding. Petitioner’s
bankruptcy schedules listed unsecured creditor’s claims totaling
$216,820, more than $100,000 of which were discharged in
bankruptcy.
The SBA filed with the bankruptcy court a creditor’s claim
against petitioner and James in the amount of $49,646, arising
from its emergency disaster loan to Foust Bros. Farms. The FMHA
filed creditor’s claims with the bankruptcy court arising from a
disaster loan to Foust Brother’s Farms against petitioner and
James in the amounts of $56,505 and $48,700, respectively. In
response to a complaint filed on behalf of the SBA and FMHA by
the U.S. Attorney’s Office for the Southern District of Iowa, the
bankruptcy court held, following a trial, that petitioner and
James were personally liable for the debts of Foust Bros. Farms
and that their debts to the SBA and the FMHA were not
dischargeable in bankruptcy. The bankruptcy court entered
judgments against petitioner, in favor of the SBA in the amount
of $49,646, and in favor of the FMHA in the amount of $56,505.
The findings and order of the bankruptcy court were upheld as to
petitioner by the District Court of the Southern District of Iowa
and the Court of Appeals for the Eighth Circuit.
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Last modified: May 25, 2011