United States Court of Appeals 

for the Fifth Circuit ____________ 

No. 23-10698 

____________ 

In the Matter of Darren Scott Matloff 

Debtor, 

Triumphant Gold Limited, 

Appellant, 

versus

Darren Scott Matloff, 

Appellee. 

______________________________ 

Appeal from the United States District Court 

for the Northern District of Texas 

USDC No. 4:22-CV-274 

______________________________ 

Before Stewart, Clement, and Ho, Circuit Judges.

Per Curiam:*

Triumphant Gold Limited (TGL), a creditor, opposed the discharge 

of certain debts before a U.S. bankruptcy court. The bankruptcy court 

nonetheless granted discharge, and TGL appealed—first to the district 

_____________________ 

*

 This opinion is not designated for publication. See 5th Cir. R. 47.5. 

United States Court of Appeals 

Fifth Circuit 

FILED 

March 20, 2024 

Lyle W. Cayce 

Clerk 

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No. 23-10698 

2 

court, which affirmed, and then to us. Because the district court applied the 

wrong standard of review, we VACATE and REMAND. 

Darren Matloff is the founder and sole owner of Rooftop, a family of 

companies that manufactured and distributed leisure-use drones. To finance 

its projects, Rooftop, through Matloff, sought financing from TGL. Rooftop 

and TGL executed two core loan agreements—one in 2016 and one in 2017. 

Relevant here is the 2017 agreement, which the parties revised and extended 

via numerous side letters. Through the agreement and its side letters, and in 

exchange for an extension of credit, Matloff agreed, in relevant part, (1) to 

reclassify as a loan from TGL a “CEO Bonus” from 2016, and (2) to collect 

purchase-order proceeds or accounts receivable and deposit those funds into 

bank accounts pledged as collateral to TGL. 

 In February 2018, Rooftop defaulted on its debt, and in 2019, both 

Matloff and Rooftop declared bankruptcy. Matloff never repaid the supposed 

bonus from 2016, however, and ceased depositing funds into the TGLpledged accounts. Matloff and Rooftop sought discharge in U.S. bankruptcy 

court. TGL opposed discharge, invoking Sections 523 and 727 of the U.S. 

Bankruptcy Code, which govern “exceptions to discharge” and 

“discharge,” respectively. 11 U.S.C. §§ 523, 727. TGL asserted both 

liquidated claims and unliquidated claims against Matloff and Rooftop.1

 After 

holding a trial, the bankruptcy court issued a 139-page opinion rejecting 

TGL’s objections to discharge. TGL appealed to the U.S. District Court for 

the Northern District of Texas, certifying four issues for review: 

1. Whether the Bankruptcy Court erred in determining that 

[Matloff]’s debt was dischargeable under 11 U.S.C. 

§ 523(a)(6) because the amounts due did not arise from a 

_____________________ 

1

 A liquidated claim in bankruptcy refers to a claim the amount of which is known, 

whereas an unliquidated claim refers to a sum that is not yet estimated. 

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willful and malicious injury inflicted through [Matloff]’s 

breach of contract; 

2. Whether the Bankruptcy Court erred in determining that 

[Matloff]’s debt owed through his personal guarantee of a 

loan made by [TGL] was dischargeable under 11 U.S.C. 

§ 523(a)(2)(A) because the guaranty was based on 

[Matloff]’s alleged false representation of his intent to 

repay; 

3. Whether the Bankruptcy Court erred in determining that 

[Matloff] should not be denied discharge under 11 U.S.C. 

§§ 727(a)(3) & 727(a)(7) because of his alleged failure to 

properly preserve financial records; and 

4. Whether the Bankruptcy Court erred in determining that 

[Matloff] should not be denied discharge under 11 U.S.C. 

§§ 727(a)(2)(A) & (a)(7) when he allegedly transferred or 

permitted his companies to transfer property with the 

intent to hinder, delay, or defraud [TGL]. 

In a two-paragraph discussion section spanning less than a single page, 

the district court affirmed the bankruptcy court’s opinion, citing only the 

high level of deference owed to bankruptcy courts’ factual determinations. In 

particular, the district court held that “[a]ll four issues certified for review by 

the District Court are factual inquiries.” It explained that “[TGL] makes no 

contention that [Matloff] was improperly awarded discharge because of a 

misrepresentation of the law, but only because the court applied the law to 

improperly drawn factual conclusions.” 

By congressional design, federal district courts serve as the first level 

of appellate review in the U.S. bankruptcy system. See generally 28 U.S.C. 

§ 158; see also River Prod. Co. v. Webb (In re Topco, Inc.), 894 F.2d 727, 734 

(5th Cir. 1990) (“Section 158(c) creates an appellate structure for appeals 

from bankruptcy courts to district courts that parallels the appellate structure 

for appeals from district courts to courts of appeals.”). Where a district court 

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affirms a bankruptcy court’s decision, we “review [the] district court’s 

affirmance . . . by applying the same standard of review to the bankruptcy 

court decision that the district court applied.” Barner v. Saxon Mortg. Servs., 

Inc. (In re Barner), 597 F.3d 651, 653 (5th Cir. 2010). Whereas a bankruptcy 

court’s findings of fact are reviewed for clear error, its conclusions of law and 

mixed questions of law and fact are both reviewed de novo. Tummel & Caroll 

v. Quinlivan (In re Quinlivan), 434 F.3d 314, 318 (5th Cir. 2005). 

Because the questions that TGL certified for appellate review contain 

issues of law as well as issues of fact, the district court erred in applying a 

blanket clear-error standard. Specifically, all four questions certified for 

appellate review ask whether discharge of Matloff’s debt was proper—

whether under Section 523 or Section 727 of the U.S. Bankruptcy Code. We 

have previously held that “the decision to discharge . . . debts represents a 

conclusion regarding the legal effect of the bankruptcy court’s factual 

findings as to [the debtor’s] circumstances.” U.S. Dep’t of Educ. v. Gerhardt 

(In re Gerhardt), 348 F.3d 89, 91 (5th Cir. 2003). Thus, discharge decisions—

whether the case turns on Section 523 or 727—are legal determinations 

subject to de novo review on appeal. Id.; see also Thomas v. Dep’t of Educ. (In 

re Thomas), 931 F.3d 449, 451–52 (5th Cir. 2019) (entitlement to discharge 

that turns on Section 523 is a question of law subject to de novo review); 

Williams v. Int’l Bhd. of Elec. Workers Loc. 520 (In re Williams), 337 F.3d 504, 

508 (5th Cir. 2003) (same); Buescher v. First United Bank & Tr. (In re 

Buescher), 783 F.3d 302, 308 (5th Cir. 2015) (entitlement to discharge that 

turns on Section 727 is a question of law subject to de novo review); Educ. 

Credit Mgmt. Corp. v. Young, 376 B.R. 795, 799 (E.D. Tex. 2007) (same). 

Because the district court erroneously applied a clear-error standard 

to the entire case on appeal, we VACATE and REMAND for the district 

court to resolve the above-certified questions under the applicable standard 

of review. 

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