Daryll and Sharon Dykes filed a petition for Chapter 7 relief in a federal bankruptcy court, reporting just under $400,000 in assets, over $5.6 million in liabilities, and a monthly income that is insufficient to cover expenses. Both of the Dykeses were surgeons, at one time earning more than $1 million per year and living in a

$3 million home. In schedules filed with the bankruptcy petition, the Dykeses did not explain the “hundreds of thousands of dollars”

of lost property, nor did they disclose

“substantial”

transfers of their assets to their children.

Creditors filing claims in the proceeding included the mortgagee that had foreclosed on their home, the home builder, and a jeweler.

Before the Dykeses’ assets were fully gathered and the estate administered, the bankruptcy court denied a discharge. A Bankruptcy Appellate Panel upheld the denial on the basis of undocumented purchases and returns of hundreds of thousands of dollars in watches and jewelry. The Dykeses appealed to the U.S. Court of Appeals for the 8th Circuit.

Should the appellate court reverse the decision to deny to the Dykeses bankruptcy protection?