the state court judgment that was rendered against him or whether it's exempt from discharge pursuant to section five twenty three eighty two the fraud exemptions to the discharge now the the key issue section five twenty three eight to be though requires that the statements be made in writing because these statements were not made in writing section five twenty three a to be can apply it can accept these debts from discharge if however the case is governed by section five twenty three a two way then the oral statements do apply in the context and there would be an exemption from discharge for two separate reasons we submit these are statements respecting financial condition the first is that in a court with this court's decision and bandai these are statements that purport to convey the overall financial picture of the debtor our second alternative argument is if that is wrong we respectfully submit that the bandai decision is wrongfully decided and that the court on bond should reconsider the bandai case so turning to the to the first issue as to the state respecting financial condition within the meaning of bandai this current band i hope that statements are statements respecting plans will condition if they quote purport to present a picture of the debtors overall financial health or as the court said these are statements that reflect a debtor's ability to repay debt the two statements here that are at issue is of mr hale are statements that the company can aerospace in quote very fine legally financial shape and also had quote plenty of cash to operate the business these are necessarily statements that purport to describe the overall financial condition of the company in fact this was the very theory of fraud the bloomington has pressed in the state court and present the bankruptcy court in order to obtain their fraud judgment and also in order to trigger the the fraud exemptions to discharge entirely so for example at  the record page four hundred ten the state court identified these statements as being material and they're being proper reliance on them precisely because they went to whether or not the company was quote unquote financially sound the bankruptcy court at the record pages thirty seven thirty eight thirty nine forty two found that these statements were relevant because they went to the company's financial stability that's the key theory the point in his press throughout this case is that these statements go to either the financial soundness or the financial stability of mckinney aerospace it's arson mission that financial sound isn't financial security are synonyms that same thing as revealing the company's overall financial health or ability to repa and so the point that that's their theory in this case we think this falls squarely within within the meaning of band i now in their opposition brief going to tries to distance itself from these statements suggesting that there's confusion as to what these statements mean that they say one statement is unclear it's precise meaning going to stop for making this argument because the very theory of fraud that they have asserted in state court and in bankruptcy court was that they relied on these statements that they were material the statements were made they relied on them and that they were false statements so having won their fraud claim on the back of these cloud of these statements they can't turn around now and try to suggest that these statements are devoid of meaning or that they can walk away from them they are central to their claim having made them central to their claim it is the natural consequence is that these are statements about financial condition of the company itself one hundred m bandy makes this difference between statements about a particular asset and as you say statements about overall financial condition i mean you just don't seem to be statements about a particular asset which helps you but i wonder if there's just a or third category of there there just these very very general comments that don't fit into either a statement about a particular asset or a statement about overall financial condition your honor if they though are that vague and sort of don't have that kind of meeting i think the plan affair would have a real problem because they would be able to show that they rel them or that the statements were material recall that they are key theories that these statements were material to their decision to provide over three hundred thousand dollars to the county aerospace and that they specifically relied on these statements in order to do so if the contention is that they are in some nebulous category of vague statements that don't say anything about mckinney either a specific asset or its overall financial condition i don't see how they can then turn around and say that they in fact relied on these statements and handing over checks for more than three hundred thousand dollars the reality is now that they have won their case on the fraud aspect of it saying that they relied on these statements i think it's clear that they have to say something significant about the company that's their theory they say things that are very significant about the company and what that is is the financial soundness or stability of the company which is you know pointed out i think is within the heartland of where bandai looks to the overall financial health of the entity so i think this is quite squarely within what the bandai court had and in to support it and if there's any kind of oral statement that would go to financial condition within the meaning of what the court held in bandai i think this is precisely the case because again as all the course of looked at this is section five twenty three a to be indicates that because there's a written requirement for when there are statements respecting financial condition there have to be a category of oral statements that respect financial condition never statements respecting financial condition means there must be some category of oral ones that don't trigger in exemption from discharge firm's overall financial assets so that a particular ass ability they said oh we have five million dollars in ad sets but no discussions about liability so you don't know the overall financial condition where would that fall under band yes or not this case but to answer the question i think that's a little unclear because bandai does say at some points that bank balances can be a condition of an overall financial statement but as your honor notes that doesn't reveal its statement of overall financial condition because you might have a five million dollar bank account for ten million dollars of liabilities i think it's a little unclear where that fits are on our respective under understand on our oats and its mission is that that is a statement respecting financial condition for all of the rea cash is largely like that just an asset side you can in plenty of cash and have liabilities of loans that far exceed whatever that plenty of cash the plenty of cash flow was made was specifically say plenty of cash to operate the business and to operate the business that means what is what is that the cash flow of needs of the business and are you a business that has sufficient cash reserves to be able to operate and turned out there at their allegation is that he had said this it was not true because there were more debts that that required them to use the cash that came in for this particular aircraft to satisfy other liabilities but that goes to the financial circumstances of the company as a whole it's not a one discrete particular asset in your own or suggestion of a state of the just says we have five million dollars of the bank in a bank account but it doesn't go further and qualify that in saying and five million dollars is plenty of cash to operate our business i think it's that second qualification is that what happens here that ties the the statement about that the asset to the nature of the business enterprise in its entirety that that ensures that this really is a statement that goes to the entirety of the business but and again you know i think it's critical to look at these statements have to be taken together this is a single theory of fraud the theory of fraud is that these into the that the company boyington was induced to provide more than three hundred thousand dollars to mckinney for the aircraft repairs and that it was induced based on these statements there's no suggestion that one would dissect these statements line by line to think that they were separate frauds that's not how this case proceeded it proceeded as one single for that's how these cases always proceed in so making the judgment of where these statements respecting financial condition are these statements respecting something else you look to them as a whole in here where the first statement is you very fine legally financial shape i think it's plainly the kind of statement that goes to the company as a whole  to saying that these are statements about financial condition and that they note the dots that the theory of the case that they have presented so at record page one hundred fifty three when describing the fraud verdict that they won in the district court they say quote hiller failed to disclose to boyington the true financial condition of bikini aerospace for the purposes of inducing boynton to make the contracts with him to tender the deposits to mccain aerospace so before there this focus on state respecting plants will condition between five twenty three eight to eight to be a rose point and was very happy to acknowledge that the purpose the relevance of the statements was it was a theory about the financial condition of mckinney aerospace and not some other less nebulous or less specific kind representation of leave one point six million dollars of funds to operate a dairy was sufficient and i think i make is just instructive of how the courts have understood that bandai has a somewhat of a broader focus that the states don't have to be in a in a particularly mechanical form of a balance sheet in order to trigger the protections under section five twenty three a to be that of course is the core is aware our alternative argument is if this is not a statement respecting financial condition within the meaning of bandai we specially put into the eleven circuits recent decision in the appling case which takes a more expansive view of what that statutory phrase means just note that since the briefs are filed the  united states recently filed a brief in the u s supreme court that endorsed that the eleven circuits position in taking a broader interpretation of what the relevant statutory text means and so the united states has indorse that that theory as being a a congress that create a policy to have a broader interpretation of this phrase in order to encourage that at the time that these sorts of debts are made that creditors obtain written statements so that where there is no later confusion as to what financial condition or statements about financial condition are made which again supports a broadening interpretation and then finally got a look this morning the so as you said the federal government recommending the supreme court hear the case and resolve th split and it said the supreme court's going to decide it in the first week in january whether to take that eleventh circuit case or follow the government's recommendation what should we do if the supreme court decides to take that case honor if the court takes that case i think the most appropriate course of likely to be to hold this decision pending what the supreme court does because i think the supreme court's guidance in appling would be quite instructive to what the if the court does change the law or clarif and section five twenty three a two a an a to b that that this court may wish to wait back on it's now i don't think it's a foregone conclusion that the supreme court's going to take that cases as your honor noted i think we do anticipate that we'll have a decision it'll go to conference most likely the first week of january there's often the realest process now so it might be until mid january i guess around january fifteenth or thereabouts we'll have an indication as to whether the court's going to take that case but if there is a grant of search right at that point then i think waiting to see what the supreme court does may be advisable but if we were to agree with your first argument then we would need to wait for that decision no your honor just to be clear if you if you agree with our first arguments then i think under any reading of section five twenty three courts properly applied the bandy standard to the facts of this case and the issues not whether the body of the standard should be reversed or modified put another way the two statements of very fine legal the financial shape and access to plenty of cash concerning the financial condition of mckinney aerospace and the insider of happily and operate to exclude the misrepresentations from the  discharge ability provision in order in order to determine whether or not these statements deal with the financial condition bandy addresses it by defining what constitutes a financial condition in commercial use and that's a very important distinction to my court and i think it is it hinges on this entire view of this otherwise if you focus on the word respecting as suggested by the appellate i think you get the last bags and i think you end up with subjective statements that are determined to be whether or not they're related in any way to a financial condition so i think is that as the as the court addresses and vandy the financial condition is defined as the overall condition of the company financially by a comparison of the value of property  income versus debts and liabilities a statement that he has plenty of cash or that they have very fine illegally financial says actually nothing about the overall financial condition of the company it's come it's income compared to prop two debts or the ability to repay debt and i think that it's important because i think this is precisely the type of case of what constitutes financial condition to say that it company has a very fine a legally financial shape already even cited has plenty of cash says absolutely nothing about the overall financial condition of the company it is indeed a very very big and there's so overly broad that i think it actually encourages the fraudulent type of statements that were made in this case these are precisely the things that i think that the bandy court addresses by defining what constitutes financial condition as opposed to just something that's rollei do or respecting a financial condition what about his argument then that if it's so vague and doesn't really say anything what grounds did you have to reasonably rely on oh i think the importance there becomes the context in which it was used your honor the just as in this case and a they talk about a repayment of debt it's important to list case i think that the fraud in this case was simply a part of a scheme to to separate the victim of the fraud from his money this was not a repayment of debt there was no loan unlike all these other cases where there's a promissory note or a preexisting debt this is a situation where a business goes to get repairs made on a jet airplane and over the course as the testimony was over several several conversations there are establishing whether or not they can entrust their money with this company to buy parts and to do the repair there was no loan there was never any repayment there was never any anticipation that this money was going to be given to the appellant to hailer and to mckinney aerospace and then repaid it some other time it was to be given in trust so that so that they could buy parts and perform the labor as soon as they gave them the money they found out they didn't buy the parts and they also found out that one day they gave a change order sixty thousand dollars and that very day found out they hadn't bought part asked for their check back they were told it already been spent so the point is that this was not alone this was not a repayment they weren't looking at the overall financial condition of the company they were talking about doing repair and this was never going to be hailers money or mckinney aerospace is mostly just to spend as  fit so in that context i think the idea that the the notion that what that overall financial condition has to do with this decision has very little because it was our money when we asked to have the money returned we didn't ask for it to be repaid this was not you know how is your company doing so when we give you this money will be able to get a loan back that's not it at all so i think you know what what the problem becomes when you look at the overall impact of of how this affects commerce if you have this is not alone this is not a bank this is a company business of trust their money was somebody on a more simple every day situation you have a homeowner that's that's that's building a home he has a contractor that says we've got change orders and i need some money and pay me this money and let's say that in the course of that conversation the home builder says oh i've got good credit i've got good credit with my back i built a lot of houses ok act clearly a situation where is material that had nothing to do to the overall definition of financial condition and baby but if you if you basically do away with the baby and say any comment any subjective comment whatsoever just like my in my example with the homeowner you're going to have somebody who's billing a home they're not going to have lawyers who don't have credit on a list they're not going to have they're not going to stop everything and say ok now i need to get a financial statement i can't trust you i can't believe that what you say that you have good credit all is good so i think that that really the genius of bandy is that it focuses the more information that's important to your decision about the overall condition and meaning if you make a loan like that that you're going to properly document that's when i think the bandy decision says that's when you need more information  says that is financial condition and that's when it's going to need to be in writing it's the it's the in this case where somebody just says oh we're very fine legally shape or we have plenty of cash that's a coming of a single asset or it's a comment that doesn't really mean anything i think that's clearly the situation where there are there is absolutely within the definition of financial condition that th and again i think in the appling case there was a discussion about what the u s had said in there or make this brief and this was largely what the apple e's reply brief said as well where they talk about this sort of dual standard it's i think that if you if you take as a financial condition the comparison of income and property versus debts and liabilities i think it would be easy to say we have plenty of cash but we do have a lot  you know you may get to the point where if if you as long as you don't just make a single comment on work and find shape a lot and if you say i have plenty of cash i don't know whether that means you have investors who are willing to give you money i don't know whether that means you have a line of credit i don't know whether that means if you're if you're doing part for an airport ok and you get money up front so maybe i assume you get money up front from everybody you're doing repairs for ok so i think i just think that rather than a single comment that doesn't really say anything about some names will condition as defined by banding but our balance sheet is in great shape well again i mean that's that becomes a subjective question about what great shape means to that part from your side if he's saying that statement about seems to be more of how specific it is that whether it's a statement about the overall financial condition well i think the problem and i and i understand i've really wrestled with this whole notion of of the importance of what's financial condition means if it's a slippery slope seems to me that if you start saying anything respecting financial condition you know we've got we've got a great balance sheet ok if you say that that isn't the last to all lap and i say that in the context like i did here is that statement is used to gain the confidence of the victim of the fraud and and the person who knows it knows that if i was i don't put it in writing i'm good to go i file bankruptcy and get a discharge i don't think that's what the bankruptcy code anticipates i don't think that's what congress thinks when they talk about you know get a fresh start on this but unfortunate debtor i think we've got that other than that countervailing balance so the fact that you make sort of that subjective overall i've got a good balance sheet if if it's not in proper context and in a situation like we have here where their and then they don't do it that this is that simple comma of well we're going to get balance sheet gives them a discharge and i don't think that's that's that would be a problem seems to me overall  you're standing when you're thinking about it from the perspective of your client who received an oral communication but if you think about it from the standpoint of let's say there's someone who had a in writing our balance sheet is in great shape if that's not a statement respecting financial condition then that person cannot is not excused from from discharge based on the fraud it's you know it's not it's not of it's not and as the eleventh circuit opinion says it's you have to consider that this is really a preference for having things in writing and obviously i think i think that is a preference but you know in in the real world i don't think people write all these things  don't think you're going to stop and say let me run my order in here when i'm trying to i'm trying to get something done in a make sure i get this all in riding and then you're put to the test of you know if it's it arriving may we have a higher standard of reliance that we have to say well we've got this financial statement what did you do to look beyond these numbers and did you ask them tell me about all your liabilities and tell me about all of these issues then you know i think it's just a huge shifting of the burden from from the over to the victim of the fraud to have to you know rise to of much higher level than i think would should be required and certainly out they stole our money and it once they stole the money and used it for other things then we had it but it wasn't we didn't have a preexisting arrangement where we knew we were going to have a repayment and their overall financial condition was writing requirement solves and the solution here is the eleventh circuit said the statute creates a preference to put these sorts of representations in writing their number of reasons why that's so it makes that the representations more accurate at the outset because it ensures that the parties have an agreement upon what representations are actually being made it also shows what the reliance actually is because where creditor wants to be able to turn around and say later i relied on this information in extending in providing a payment on credit as as was the case here that you actually have a record as to what what statements that the creditor at that time thought it was relying upon and thought were important if it's all done  statements you have the ability to years after the fact sometimes like this case a decade or more later have to settle a bankruptcy court with understanding well there's there's a debt or there's a creditor obviously there's a loss of money here the  creditor will have an incentive to remember that that certain circumstances were that they had a reliance interest that certainly don't accord with what the debtor recalls of the circumstances of having been as eleven circuit noted the congress created as a simple solution which is for this kind of circumstance put the representations in writing and then there won't be any doubt after the fact as to what statements were made and whether or not that there was reminds interest on those statements in the provides much easier adjudication for the bankruptcy courts to be able to have a written record of the transaction my second point is that they counsel again says that these statements are vague and questions that the underlying meaning of the statements but that counsel hasn't provided any basis for how he can square that argument with the fundamental theory of this case which was that that they relied on these statements and that that that the they are the linchpin of their fraud claim now the argument that's repeated is that they didn't expect repayment of money but they are creditor here it is just the same way because the what they expected was repayment of an aircraft that was fixed it doesn't make a difference if you're lending out money on credit and you're in dissipating getting the money repaid to you or if you're lending out money on credit and you're dissipating having a fixed aircraft return to you in both circumstances the reason that you'd be asking about the financial stability of the company that you're giving out money to on credit is because you want to know that you're going to whatever you're into supporting getting return to this decision to entrust money to to give money out in credit for aircraft parts the very reason it wanted to know whether or not the company was my actually sounder or financially safe stable was precisely so it could determine whether there was risk provide money to get airplane parts or whatever what how should that have been set up so this wouldn't happen well so your honor if they want to be able to exempt a step from destruction and no this is very powerful medicine exempting from discharge they could have asked and said well we would like a written statement about bikini aircrafts think about that having how should they they never think about that ahead of time we ever met anybody who in the bankruptcy business who started worrying about whether they were going to have exemption from discharge at the beginning of the transaction the question is how do they set it up in such a way that they get their money back well your honor the i think that there are some sort of set up well the answer is they can make a bankruptcy claim like all the other creditors of mckinney aircraft do the question is it can they bring a claim of the bankruptcy action they absolutely can bring a claim of the bankruptcy action like every other creditor the question is instead can they exempt that from bankruptcy discharge you know how should how should they have set up this money so they didn't have to worry if a bankruptcy ensued what they would need to get in writing your honor at the at the outset they would have to get a representation about the financial condition that they say was material to their decision