Scarinci Hollenbeck Prevails in Discharging Client’s $1.1 Million Bankruptcy Debt

Partner David Edelberg Successfully Defeats Objection to Bankruptcy Discharge Through Directed Verdict 

Little Falls NJ – August 29, 2023 – Scarinci Hollenbeck obtained a directed verdict in the United States Bankruptcy Court for the District of New Jersey rejecting an objection to discharge involving a $1.1 million debt. David Edelberg, Partner and Chair of Scarinci Hollenbeck’s Bankruptcy & Creditors’ Rights Practice Group, represented the debtor, Alicia Gallo.

Builders’ General Supply Company filed a complaint in bankruptcy court objecting to the discharge of its claim of over $1 million dollars against Ms. Gallo. While most debts can be discharged in bankruptcy, Section 523(a)(2)(A) of the Bankruptcy Code excepts from discharge a debt for money, property, or an extension of credit to the extent it was obtained by false pretenses, a false representation, or actual fraud. If an objection under Section 523(a)(2)(A) is successful, the debt will not be discharged.

Scarinci Hollenbeck filed motions which successfully dismissed two of Builders’ claims alleging breach of fiduciary duty and fraud in connection with credit card charges. The last remaining claim, alleging that Ms. Gallo fraudulently entered into a settlement agreement, proceeded to trial before Judge Kathryn Ferguson in April 2023. 

After Builders’ concluded its case, Scarinci Hollenbeck moved for a directed verdict, arguing that Builders’ had not met its burden of proof. Judge Ferguson reserved her decision until June 2023, when the Court issued a ruling in favor of Ms. Gallo.  As a result, Ms. Gallo has successfully discharged Builders’ $1.1 million dollar claim.

“We are pleased that the Bankruptcy Court agreed with us that Builders’ had failed to prove its claim,” Mr. Edelberg stated. “The verdict will allow our client to move forward and obtain the fresh start which she deserves.”

The case is Builders’ General Supply Co. v. Gallo (21-01220-KCF), New Jersey Bankruptcy Court.

Results may vary depending on your particular facts and legal circumstances

About David Edelberg

David Edelberg is a member of Scarinci Hollenbeck’s Bankruptcy and Creditors’ Rights practice group. Mr. Edelberg has extensive experience handling a wide variety of bankruptcy matters, including Debtor Representation, Creditors’ Rights, and Banking and Financial Services Litigation, and more. Mr. Edelberg is the Immediate Past Chair of the Bankruptcy Law Section of the NJ State Bar, Chair of the Professionalism Committee of the NJ State Bar, Chair of the Bankruptcy Law Section of the Bergen County Bar Association, and is a Trustee of the New Jersey Bar Association.

Learn more about Mr. Edelberg: https://scarincihollenbeck.com/attorneys/david-edelberg

About Scarinci Hollenbeck’s NJ Bankruptcy Practice

Scarinci Hollenbeck’s attorneys are accustomed to dealing with complex and sophisticated business matters and have many years of experience handling the myriad of financial issues surrounding bankruptcy and reorganization, out of court workouts, and state and federal court litigation over creditors’ and debtors’ rights. Our attorneys’ broad legal and business knowledge allows them to achieve creative, expeditious, and cost-effective solutions to our clients’ most challenging issues.

Additional information on the firm’s Bankruptcy & Creditors’ Rights Practice can be found on our practice page: https://scarincihollenbeck.com/practices/bankruptcy-and-creditors-rights