The court awarded sanctions in the form of attorneys’ fees to the debtor’s wife after determining that the debtor filed his Chapter 7 petition for an improper purpose. The evidence at trial showed that the debtor was not insolvent, was not under the weight of oppressive indebtedness, and did not required a fresh start. The debtor also knowingly and fraudulently represented his assets in his bankruptcy schedules, and the court found that “he did not intend to surrender his property for distribution as required in a Chapter 7 case.”
Instead, the court held, the debtor filed the bankruptcy case to delay his marital dissolution proceedings, increase the costs for his wife, and “attempt to obtain leverage or to change what debtor believed might involve an undesired outcome” regarding property settlement. As a result, the court awarded sanctions under Rule 9011 to the wife for fees “directly caused by the filing of the petition,” and the fees and costs in connection with presenting the motion for sanctions. The court ruled that the fees awarded were “warranted for effective deterrence by others similarly situated” and were reasonable in amount.