Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 15

Thomas Montgomery, Kenneth Henning, and attorney Gary Derer formed HLM Assurance Group, L.L.C. to sell insurance to Derer's clients. Henning and Derer funneled money due HLM and/or Montgomery to other entities that Henning and/or Derer controlled. They did not allow Montgomery access to HLM's financial information or information related to the disbursement of commissions. They demanded that Montgomery return his key to HLM's office. Derer fraudulently transferred to Jordan Massad $165,000 in policy commissions that Montgomery had earned. When he filed a voluntary petition for relief under Chapter 7, Derer did not list an interest in HLM on his schedule of assets. In answer to a question on the bankruptcy forms requiring him to list all his business interests, he only listed his law firm. Montgomery objected to Derer's discharge. Should Derer be discharged? [In re Derer, 400 B.R. 97 (E.D. Tex.)]