Partner David Edelberg Successfully Defeats Objection to Bankruptcy Discharge Through Directed Verdict
Little Falls NJ – August 29, 2023 – Scarinci Hollenbeckobtained 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.
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.
Guardianships in New Jersey: When a Loved One Can No Longer Manage Personal or Financial Affairs
When a family member can no longer make important decisions for themself, the question is often not whether the family will step in, but whether they have the legal authority to do so. A spouse may manage household finances, or an adult child may arrange medical care and pay bills. Still, informal assistance does not […]
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders
Utility-scale battery energy storage systems (BESS) are becoming an increasingly important component of the electric grid throughout New Jersey, New York, and Pennsylvania. As renewable generation expands, electricity demand increases and grid operators seek greater flexibility, battery storage can help balance supply and demand while providing additional capacity and reliability. For developers, battery storage presents […]
Navigating Disputes: Hire a Partnership Dispute Lawyer
A falling out between partners can be disastrous for any business. In many cases, the partnership will not survive. If you are in an unworkable situation with your partners, it may be time to consult a partnership dispute lawyer experienced in handling partnership breakups and dissolutions before the situation deteriorates any further. It is easy […]
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
