Schwartz v. Barclays Capital, Inc., No. 15-1416 (7th Cir. 2015)Annotate this Case
Schwartz was hired as an executive of Barclays, which lent him $400,000 and promised to forgive the loan in equal installments on the first through seventh anniversaries of his start date. Before the second anniversary, the company fired him, which made the unforgiven principal immediately due. Schwartz refused to pay. An arbitrator sided with Barclays and ordered Schwartz to pay $568,568, which included attorneys’ fees plus interest. In response, Schwartz petitioned for bankruptcy under Chapter 7. Between the announcement of the arbitration award and the filing of the bankruptcy petition the Schwartzes spent thousands of dollars on inessential consumer goods and services, including tickets to Disney World, private school tuition, and a monthly payment for a Range Rover. Learning of these expenditures, Barclays, the Schwartzes’ principal creditor and the only active opponent of granting a discharge, moved to dismiss. The court dismissed the petition under 11 U.S.C. 707(a), “for cause.” The Seventh Circuit affirmed, finding that “for cause” embraces conduct that, while not a violation of required procedures, avoids repayment of debt without an adequate reason. The Schwartzes failed to pay as much of their indebtedness as they could without hardship.