IN RE JANTZ, (W.D.Okla. 1979)

KLINE, Bankruptcy Judge

A materially false financial statement signed and presented to a creditor bank is not sufficient to prevent the discharge of the unpaid balance owed the creditor since the entire sum loaned to the bankrupts had been loaned prior to the giving of the challenged financial statement.

The court determined that the "fresh cash" doctrine limits a bankrupt's liability for non-dischargeable debts to the amount of new money received in the renewal of a loan based upon the false financial statement. Because no additional money or fresh cash was loaned in reliance upon the false statement, the entire debt was dischargeable under Section 17a(2) [§ 523(a)(2)] at ¶ 9228.

The use of accounts receivable in which the creditor had a security interest, by the bankrupts, to carry on ordinary business one month prior to bankruptcy when the bankrupts were considering filing their bankruptcy petitions did not constitute willful and malicious conversion. The creditor, a bank, had in the past permitted the use of the accounts receivable to pay obligations occurring in the usual course of business and could not now prevent the discharge of the debt under Section 17a(2) by claiming that such conduct constituted willful and malicious conversion. See Sec. 17a(2) [§ 523(a)(2)] at ¶ 9228.