Bustos v. Molasky

The second appeal in this bankruptcy proceeding involved Augustine Bustos’s efforts to pursue an exception-to-discharge claim pursuant to 11 U.S.C. 523(c) against Steven Molasky, who filed for chapter 11 bankruptcy. Bustos moved to intervene in a section 523 adversary proceeding initiated by OneCap Funding Corporation, which represented Bustos’s interest under a loan-servicing agreement. The bankruptcy court allowed Bustos to intervene but prohibited him from filing his own complaint. OneCap was later dismissed from the proceeding for failure to prosecute. The bankruptcy court dismissed the adversary proceeding in its entirety, concluding that because Bustos failed to assert a timely separate objection to dischargeability, Bustos could not continue to prosecute the action. The Bankrtupcy Appellate Panel (BAP) affirmed. The Fourth District reversed, holding that Bustos was entitled to continue prosecuting the section 523 claim originally filed by OneCap. View "Bustos v. Molasky" on Justia Law