In Re: Zuriel Melamed
- Nelson Roman
- 7:21-cv-02022
- U.S. District Court · Southern District of New York
- 6
In Re: Zuriel Melamed v. Swift Financial, Judge Roman affirmed extending Swift’s deadline to challenge whether Melamed’s debt could be discharged.
Zuriel Melamed and Swift Financial LLC; the bankruptcy court’s extension of Swift’s deadline to file a complaint concerning whether Melamed’s debt could be discharged remained in effect.
What happened
In the appeal in In Re: Zuriel Melamed v. Swift Financial LLC, Zuriel Melamed challenged a bankruptcy court order giving Swift more time to file a complaint about whether his debt could be discharged. Swift had sought the extension while pursuing information through a bankruptcy examination.
Melamed argued that Swift’s allegations supporting the debt challenge were inaccurate and conclusory. The district court said those allegations were not the issue: the bankruptcy court only had to decide whether there was a reason to extend Swift’s filing deadline. Because Swift had sought information that could be important to its decision and had pursued a bankruptcy examination, the court found that the extension was allowed under the bankruptcy rules.
Judge Nelson S. Roman affirmed the bankruptcy court’s order and directed the clerk to close the case. The extension allowing Swift to file its complaint by March 31, 2021, therefore remained in effect.
The detailed version
- In Re: Zuriel Melamed · No. 7:21-cv-02022
- Nelson Roman
- Dec. 27, 2022
Background
Zuriel Melamed was the sole owner of Achla Shawarma Factori Inc. Achla entered into a business loan agreement with WebBank, and Melamed personally guaranteed the payments. After Achla and Melamed failed to meet their obligations and defaulted, Melamed filed a Chapter 13 bankruptcy petition on July 9, 2020. Swift Financial LLC, acting as WebBank’s serving agent, received notice of the bankruptcy case and appeared in it.
The Bankruptcy Court initially set October 20, 2020, as the deadline for Swift to file a complaint challenging whether Melamed’s debt could be discharged. Swift later asked for more time and also sought an examination under Bankruptcy Rule 2004. The Bankruptcy Court granted the extension and, in its January 19, 2021, Extension Order, moved Swift’s deadline to March 31, 2021. Melamed appealed that portion of the order.
Issue and standard of review
The district court considered whether the Bankruptcy Court abused its discretion by finding sufficient cause to extend the deadline under Bankruptcy Rule 4007(c). That rule permits a bankruptcy court to extend the deadline for filing a complaint about whether a debt is dischargeable when a party timely requests an extension and shows cause. An abuse of discretion occurs when a court relies on an incorrect legal view or makes a clearly mistaken assessment of the evidence.
Analysis
Melamed argued that Swift’s extension request relied on inaccurate and conclusory allegations about his conduct, including allegations that he intended not to repay the loan, misrepresented Achla’s finances, and used loan proceeds for personal purposes. The district court held that these allegations concerned the possible future challenge to dischargeability, not the separate question of whether Swift should receive more time to investigate and file that challenge. Their truthfulness therefore did not determine whether the extension was proper.
The district court reviewed the bankruptcy docket and found that Swift lacked access to potentially important information from the pending Rule 2004 examination, which Swift had sought and Melamed had opposed. The court concluded that the Bankruptcy Court was within its discretion to give Swift additional time to determine whether it could properly object to dischargeability.
Disposition
The district court affirmed the Bankruptcy Court’s Extension Order. The clerk was directed to close the case.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.