Opinion ID: 63408
Heading Depth: 3
Heading Rank: 3

Heading: Explanation of Loss

Text: Finally, Cadle argues that the bankruptcy and district courts erred in concluding that the Orsinis were not subject to denial of discharge under 11 U.S.C. § 727(a)(5) because they failed to explain the loss in value to their jewelry and coin collection. Section 727(a)(5) provides, “The court shall grant the debtor a discharge unless . . . the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor’s liabilities.” In this context, [t]he word “satisfactorily” . . . may mean reasonable, or it may mean that the court, after having heard the excuse, the explanation, has that mental attitude which finds contentment in saying that he believes the explanation — he believes what the bankrupts say with 9 No. 07-40450 reference to the disappearance or shortage. He is satisfied. He no longer wonders. He is contented. First Tex. Sav. Ass’n, Inc. v. Reed (In re Reed), 700 F.2d 986, 993 (5th Cir. 1983). The bankruptcy court concluded that “there was no loss of assets within the meaning of section 727(a)(5), and to the extent a loss could be said to have occurred, the Orsinis have satisfactorily explained the loss.” Cadle argues that the Orsinis attributed $10,000 of the “other personal property” listed on their March 2000 statement to their jewelry and coin collection. Yet, on their bankruptcy schedules two and a half years later, the Orsinis reported the value of the coin collection as $325 and the value of the jewelry as $75. Cadle asserts that the Orsinis only explained the loss of a single piece of jewelry worth about $1000.00, and have thus failed to adequately explain the 95 percent decline in the value of these assets. The bankruptcy court found, however, that the values listed in the financial statement were based on the fair market value of the assets, while the values in the bankruptcy schedules were liquidation values. Cadle has offered no evidence that any of the coins or jewelry, other than the piece of jewelry Rebecca acknowledges she lost, are missing. Like the district court, we are unwilling to reject the bankruptcy court’s findings, premised upon its observations of the witnesses and the evidence at trial, based solely upon Cadle’s skepticism about the reduction in value of these assets. We, therefore, affirm the bankruptcy court’s finding that discharge should not be denied under 11 U.S.C. § 727(a)(5).