Delaware Grants Motion for Contempt and Indicates that Incarceration Can Be Appropriate Sanction

September 3, 2014

Publication| Bankruptcy & Corporate Restructuring

In Burtch v. Masiz, the United States Bankruptcy Court for the District of Delaware granted the plaintiff-trustee’s motion for contempt as against a judgment-debtor who did not comply with the terms of a discovery-related order earlier entered by the court. In its opinion, the court discussed the standards for civil contempt and determined that arrest and incarceration is a permissible sanction under appropriate circumstances.

The trustee had sued the defendant to avoid and recover alleged preferential and/or fraudulent transfers and for other relief. The court entered a final judgment on the trustee’s claim for constructive fraudulent transfer in the amount of $322,927 plus prejudgment interest from and after December 29, 2009, through the date of satisfaction of the judgment. The defendant thereafter did not fully respond to the trustee’s interrogatories and requests for production of documents pursuant to Fed. R. Bankr. Proc. 7069(a), and the court entered its order to compel the defendant’s response to the discovery requests. The defendant did not comply with the order, and the trustee filed its motion and moved the court for the issuance of a bench warrant exercisable for the arrest and detention of the defendant to ensure the defendant’s compliance with the order.

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