BRIXMOR/IA REGENCY PARKS SC, LLC v. Valencia

UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
In re:
Augusto Sanders Valencia, 	Case No. 3:24-bk-03966-BAJ
Chapter 7
Debtor.
_____________________________________/
Brixmor/IA Regency Parks SC, LLC,
Plaintiff,
v. 	Adv. No. 3:25-ap-00047-BAJ
Augusto Sanders Valencia,
Defendant.
_____________________________________/
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This Proceeding came before the Court for trial on February 18, 2026 (the “Trial”), on the
Complaint brought by Brixmor/IA Regency Parks SC, LLC (“Plaintiff”) against Augusto Sanders
Valencia (“Debtor”). By this Proceeding, Plaintiff objects to Debtor’s discharge pursuant to 11
U.S.C. § 727(a)(4) and Fed. R. Bankr. P. 4004 and 7001. Upon consideration of the testimony,
evidence, and respective arguments of counsel, the Court finds that Debtor, who suffers from
serious medical issues, did not make material inconsistent statements or omissions that warrant a
Dated: June 18, 2026
ORDERED.
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denial of his discharge under § 727(a)(4).1 Accordingly, for the reasons set forth herein, the Court
finds in favor of the Debtor.
Findings of Fact2
On December 31, 2024, Debtor filed a voluntary petition under Chapter 7 of the United
States Bankruptcy Code. Debtor, who is self employed as a hairdresser, has a myriad of serious
health issues including neurological deficits arising from a previous stroke.3 Debtor’s health issues
were collaborated by medical reports, as well as testimony from Debtor’s stepmother, Aurora
Valencia (“Mrs. Valencia”), who stated that his medical issues have affected his ability to
remember things and to properly run a business.4
In August of 2024, Debtor started JLS Salon & More, LLC (“JLS”). Debtor was the sole
member of JLS and entered a sixty-two-month commercial lease (the “JLS Lease”) for the
premises to operate a beauty salon.5 Debtor personally guaranteed the JLS Lease but was unable
to financially or physically open the space he rented under JLS. At the Trial, Debtor testified that
JLS is not an active corporation in the state of Florida.6
Approximately two months later, Mrs. Valencia filed Articles of Incorporation for
Expression Salon & More, LLC (“Expressions”). Although Debtor was never listed as an officer,
member or manager of Expressions, he manages the day-to-day operations of the salon. Mrs.
1 As the Court noted at the conclusion of the Trial, counsel for both parties did a very good job in presenting their
respective cases, and the Court appreciates the professionalism exhibited.
2 The Court incorporates by reference the Joint Stipulation of Undisputed Facts filed by the parties. (Doc. 27).
3 Tr. pgs. 92-96; Debtor’s Ex. 7, pgs. 119, 146.
4 Tr. pgs. 72-74.
5 JLS was located at 4131 University Blvd., Building 5, Jacksonville, Fl. The term of the lease was from September
15, 2024, to November 15, 2029. (Doc. 27, p. 2).
6 Tr. p. 98.
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Valencia testified7 that she provided the funding to open Expressions, and that Debtor’s father
provided the labor and materials.8 Debtor testified that as of December 31, 2024, he considered
himself to be operating his hairdressing business under Expressions.9
On Debtor’s Schedule A/B, Debtor disclosed a CashApp account with a balance of $90.00
and two checking accounts with zero-dollar balances.10 On Schedule I, Debtor lists gross monthly
income of $4,000.00 and net monthly income of $2,000.00.11 	As listed on the Statement of
Financial Affairs (SOFA), Debtor earned gross income in 2023 of $18,450.00, and gross income
in 2024 of $36,000.00.12
On January 31, 2025, the Chapter 7 Trustee, Gregory K. Crews (“Trustee”), held and
concluded the Section 341 Meeting of Creditors (the “Meeting of Creditors”). The Trustee also
filed a report of no distribution which shows that no assets were recovered on behalf of the estate.
In May of 2025, Plaintiff initiated this Proceeding by filing a complaint (the “Complaint”)
objecting to Debtor’s discharge pursuant to 11 U.S.C. § 727(a)(4).13 The parties’ dispute arises
from a commercial lease agreement Debtor entered with Plaintiff, for the purpose of utilizing the
space to operate a hair salon. Debtor defaulted on the lease agreement, and Plaintiff filed a suit
against Debtor in April of 2018 in the Circuit Court in and for Duval County, Florida (the “State
7 The Court commends the genuine and forthright testimony given by Mrs. Valencia, who was kind enough to appear
in court on her birthday to be a witness. Debtor clearly has extremely supportive family members who have offered
assistance through his health struggles to help him stay afloat in his hairdressing business.
8 Tr. pgs. 68-71, 98.
9 Tr. p. 98.
10 The checking accounts listed were for TD Bank and Wells Fargo. (Doc. 1, pg. 12).
11 Doc. 1, pgs. 59-60.
12 Doc. 1, p. 69.
13 Adv. Doc. 1.
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Court Action”).14 The State Court Action complaint included one count for possession and one
count for breach of contract.15 	Plaintiff prevailed in the State Court Action, obtaining both a
default final judgment for possession,16 and a monetary final judgment dated March 28, 2019 in
the amount of $119,455.89 (the “Final Judgment”).17 	For approximately four years, the State
Court Action sat idle until October of 2024 when Plaintiff renewed its post-judgment collection
efforts, which subsequently led to Debtor filing for protection under the Bankruptcy Code.
As grounds for the Complaint, Plaintiff alleges that Debtor failed to disclose the following
in his Schedules and SOFA: (i) several bank accounts, (ii) his interest as sole owner in JLS Salon
& More, LLC, (iii) his interests and obligation under the JLS Lease, and (iv) all his income.
Plaintiff also alleges that Debtor’s testimony at the Meeting of Creditors was false as it pertained
to the nature of his business as a hairdresser, and the hairdressing businesses in which he holds an
interest. The Joint Stipulation of Facts sets forth some of the various inconsistencies alleged by
Plaintiff.
In response to the allegations, Debtor states that a few days after the Meeting of Creditors
he filed an Amended Petition and an Amended SOFA. In the Amended SOFA, Debtor disclosed
that he has owned JLS since 2024. Debtor also filed an Amended Statement of Monthly Income,
which lists his average gross monthly income as $5,103.41, and his average net monthly income
as $2,853.41.18 In April of 2025, Debtor filed a Second Amended Property Schedule in which he
disclosed a 100% ownership interest in JLS, with a value of $0.00.
14 State Court Action Doc. 2. The State Court Action is styled: Brixmor/IA Regency Parks SC, LLC v. Augusto S.
Valencia, Case No. 16-2018-CA-2090.
15 Id.
16 Id. at State Court Action Doc. 22.
17 Id. at State Court Action Doc. 29.
18 Debtor also filed an Amended Summary of Assets/Liabilities listing his monthly income as $2,000.00.
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Also in April of 2025, Debtor filed an Amended Schedule A/B in which he disclosed an
additional checking account with Chase Bank (the “Chase Bank Account”), with a balance of
$1,223.30.19 Debtor testified at the Trial that the Chase Bank Account was not initially listed on
his Chapter 7 petition because he forgets things due to the stroke he suffered, and he was heavily
medicated at the time. 	At the 2004 Examination, Debtor testified that he pays for his personal
expenses from the Chase Bank Account, and that the cash deposits and Zelle deposits in that bank
account are from his hairdressing clients. Debtor also testified that total monthly deposits
exceeding $3,000.00 in the Chase Bank Account are attributable to “favors [he] bequests others
that don’t have the ability to open their own bank account,” and that he makes payments and
purchases on their behalf because “they lack a credit card to their name.”20 (Tr. p. 96). 	Debtor
further explained that this is why the Chase Bank Account has a $0.00 balance at the end of every
month.
Debtor also maintains that JLS, as set forth in the JLS Lease, was the tenant under the
agreement and that his sole connection to the lease is his personal guaranty of the obligation.21
Accordingly, Debtor argues that he was not required to list the lease on Schedule G.
Conclusions of Law
“In a Chapter 7 proceeding, an individual debtor receives an immediate unconditional
discharge of personal liabilities for debts in exchange for the liquidation of all non-exempt
assets.”22 “The Bankruptcy Code favors discharge of the honest debtor's debts and provisions
19 The Chase Bank Account has an account number ending in 3142. Debtor previously had three other bank accounts
at Chase Bank but those accounts were closed between May of 2024 and December of 2024. (Doc. 27, pgs. 6-7).
20 Debtor also testified that his friends sometimes wire him money when he is in need. (Tr. p. 96). Additionally,
Debtor explained that his father sometimes gives him money to deposit into his account so that he can make his father’s
car payment on his behalf. (Tr. p. 97).
21 Plaintiff’s Ex. 26.
22 Schultz v. U.S., 529 F.3d 343, 346 (6th Cir. 2008).
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denying a debtor's discharge are construed liberally in favor of the debtor and strictly against the
creditor.”23 The right to a bankruptcy discharge though is not limitless.24 “Section 727 ... provides
that a debtor shall be granted a discharge unless one or more of twelve enumerated reasons to deny
the discharge exists.”25 Plaintiff seeks to have the Court deny Debtor’s discharge pursuant to 11
U.S.C. §727(a)(4).
Section 727(a)(4)(A) provides for denial of a debtor's discharge if he “knowingly and
fraudulently, in or in connection with the case—made a false oath or account.” 11 U.S.C. §
727(a)(4)(A). The First Circuit has stated:
[T]he very purpose of...§ 727(a)(4)(A) is to [ensure] that those who seek the shelter
of the bankruptcy code do not play fast and loose with their assets or with the reality
of their affairs. The statutes are designed to ensure that complete, truthful, and
reliable information is put forward at the outset of the proceedings, so that decisions
can be made by the parties in interest based on fact rather than fiction ... Neither
the trustee nor the creditors should be required to engage in a laborious tug-of-war
to drag the simple truth into the glare of daylight.26
“A plaintiff objecting to a debtor’s discharge under § 727(a)(4)(A) for an alleged false oath
or account must establish by a preponderance of the evidence that the debtor is not entitled to a
discharge.”27 Were courts to strictly construe 11 U.S.C. § 727(a)(4)(A), almost any omission from
a Debtor’s schedules or misstatement at the 341 Meeting could ostensibly be grounds for denial of
discharge. Such a result would not align with the spirit and intent of the Bankruptcy Code. Instead,
“[t]he Bankruptcy Code favors discharge of an honest debtor’s obligations.”28 A court’s reasons
23 In re Allen, 553 B.R. 916, 922 (Bankr. M.D. Fla. 2016).
24 Id.
25 Menotte v. Hahn (In re Hahn), 362 B.R. 542, 546 (Bankr. S.D. Fla. 2007).
26 Boroff v. Tully (In re Tully), 818 F.2d 106, 110 (1st Cir. 1987).
27 Forbes v. Moore (In re Moore), 559 B.R. 243, 254 (Bankr. M.D. Fla. 2016) (citation omitted).
28 In re Jennings, 533 F.3d 1333, 1338 (11th Cir. 2008).
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for denying a discharge “must be real and substantial, not merely technical and conjectural.”29
“[T]he denial of a debtor’s discharge is an ‘extraordinary remedy’ and an ‘extreme penalty’ to the
debtor.”30
A party seeking the denial of a discharge pursuant to § 727(a)(4)(A) must establish the
following elements: 1) the debtor made a statement under oath; 2) the statement was false; 3) the
debtor knew the statement was false; 4) the debtor made the statement with fraudulent intent; and
5) the statement related materially to the bankruptcy case.31 A false oath may involve a false
statement or omission.32 “There is a difference between a debtor who is trying to hide assets with
a false oath or material omissions in his [schedules], and a debtor who, through inadvertence,
mistake, or ignorance ... omits[s] certain assets.”33 	In determining whether a debtor has the
requisite fraudulent intent, a court should analyze whether omissions or nondisclosures are “part
of a scheme ... to retain assets for [the debtor's] own benefit at the expense of his creditors.”34
In support of its argument under § 727(a)(4)(A), Plaintiff alleges that Debtor failed to
disclose the following in his Schedules and SOFA: (i) several bank accounts, (ii) his interest as
sole owner in JLS, (iii) his interests and obligation under the JLS Lease, and (iv) all his income.
Plaintiff also alleges that Debtor’s testimony at the Meeting of Creditors was false as it pertained
to the nature of his business as a hairdresser, and the hairdressing businesses in which he holds an
interest.
29 Equitable Bank v. Miller (In re Miller), 39 F.3d 301, 304 (11th Cir. 1994).
30 Forbes v. Moore (In re Moore), 559 B.R. 243, 254 (Bankr. M.D. Fla. 2016).
31 Shappell's Inc. v. Perry (In re Perry), 252 B.R. 541, 549 (Bankr. M.D. Fla. 2000).
32 Fogal Legware of Switzerland, Inc. v. Wills (In re Wills), 243 B.R. 58, 62 (9th Cir. BAP 1999).
33 In re Dupree, 336 B.R. 520, 527 (Bankr. M.D. Fla. 2005).
34 Id.
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Although Plaintiff did an admirable job with the set of facts it has, the Court does not find
the facts and circumstances lead to the finding that Debtor acted with the requisite fraudulent
intent. 	Debtor’s medical records, along with the testimony by the Debtor and Mrs. Valencia
support the conclusion that Debtor’s serious medical issues have impacted his memory, rendering
his errors and omissions unintentional. Specifically, Mrs. Valencia testified that after Debtor
suffered the stroke that he was “not the same,” and was “missing everything.”35 In response to
being asked if Debtor’s stroke has affected his ability to run a business and keep track of money,
Mrs. Valencia responded:
Junito does things that I - - what happened, Junito? Sometimes I
need to talk to him. What happened to you? Why are you forgetting
things? Why are you losing things? I know that you need help. 	I
would like to be more with him, but I can’t. His father is not in good
condition either. 	He have a lot of issues, and I know that he’s so
worried because he’s so worried about his son, and he’s my son, and
I need him. I need Junito in my life.36
Without fraudulent intent, these misstatements cannot form the basis for the denial of Debtor’s
discharge.37
Furthermore, the Court finds any inconsistent statements or omissions were not material.
This finding is supported in part because the Trustee filed a report of no distribution. The Court
finds this notable because a trustee’s duties include, but are not limited to: collecting and reducing
to money property of the estate, investigating the financial affairs of the debtor, opposing the
debtor’s discharge if advisable, furnishing information requested by parties in interest regarding
the debtor’s estate, and ensuring that the debtor’s income does not exceed the means test or
35 Tr. p. 72.
36 Throughout the Trial, Mrs. Valencia referred to Debtor as “Junito.”
37 Id.
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otherwise give rise to a presumption of abuse.38 Given these duties, the Court finds it relevant that
the Trustee found no assets worthy of pursuit, including any prepetition transfers or any of Debtor’s
business interests.
In support of its position, Plaintiff focuses on the large inflows and outflows from Debtor’s
bank accounts as proof of the materiality of his omissions.39 The Court finds any omissions related
to these transactions to be immaterial. First, Debtor testified credibly that due to his poor health
he is only able to service one to two clients per day.40 Further, Debtor explained that total monthly
deposits exceeding $3,000.00 in the Chase Bank Account are attributable to “favors that [he]
bequests others that don’t have the ability to open their own bank account,” and that he makes
payments and purchases on their behalf because “they lack a credit card to their name.”41
Therefore, these transactions were largely pass-through transactions and not attributable to work
performed by Debtor. Second, even assuming without deciding that these transactions could be
counted as Debtor’s income, such prepetition income would not have impacted Debtor’s eligibility
for Chapter 7. 	Debtor’s debts are primarily business debts; therefore, the means test does not
apply.42 Thus, any inconsistent statements regarding the bank accounts were not material and do
not warrant denial of Debtor’s discharge under 11 U.S.C. § 727(a)(4).43
While there is no need for the Court to dissect every other alleged falsehood or omission,
Plaintiff’s assertion that Debtor failed to disclose his “interest in and obligations under a
38 11 U.S.C. §§ 704(a)(1), (a)(4), (a)(6), and (b).
39 Adv. Doc. 46, pgs. 4-5.
40 Tr. at p. 95.
41 Tr. at p. 96.
42 In re Baird, 456 B.R. 112, 119 (Bankr. M.D. Fla. Jan. 20, 2010) (Creditor failed to establish threshold requirement
of 11 U.S.C. § 707(b) proceeding because debts were primarily business debts).
43 Gargula v. Wright (In re Wright), 618 B.R. 569, 578 (Bankr. M.D. Fla. July 13, 2020) (the court found that an
immaterial omission that was an honest mistake was no reason to deny the debtor’s discharge).
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commercial lease”44 is an example of how the allegations fail to warrant the relief sought. The
Debtor was not the tenant under the JLS Lease. An affiliated company signed as the tenant.45
Debtor’s only connection to the JLS Lease is his personal guaranty of the obligation. Therefore,
Debtor was not legally required to list the JLS Lease on Schedule G. 	Given the Debtor had no
interest in the lease, it could be of no value to the estate. If the Trustee had deemed that there was
value in Debtor’s JLS Lease interest, the Trustee would have sought turnover of the lease, sold the
estate’s interest, or sought to assign the lease for the benefit of the estate.
Since the JLS Lease does not have material value to the estate, this negates any purported
fraudulent intent. The Court therefore cannot reasonably ascertain what motive or financial gain
would have incentivized Debtor to intentionally omit the JLS Lease guaranty from his schedules.
If anything, this omission could prove harmful to Debtor if he ever defaults on the lease and the
landlord obtains a money judgment against him. Given the lack of fraudulent intent, for which
Plaintiff bears the burden of proof, the Court finds the denial of discharge based on this omission
unwarranted.46
Conclusion
The Bankruptcy Code is intended to protect the honest but unfortunate debtor. Life is not
always kind, and at some point, hardships befall us all. Sadly, Debtor has experienced more than
his share of tumultuous times. 	The Court listened intently to the testimony and documentary
evidence presented at Trial, and despite the myriad of allegations, when boiled down to its essence,
Debtor’s bankruptcy case was deemed a no asset case by an experienced Chapter 7 Trustee, the
JLS Lease has no ascertainable value, and Debtor made no material omissions. 	Based on the
44 Adv. Doc. 46, p. 2.
45 Plaintiff’s Ex. 26.
46 In re Moore, 559 B.R. at 254.
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above, the Plaintiff did not meet its burden under § 727(a)(4), and the Court will enter a separate
judgment consistent with these Findings of Fact and Conclusions of Law in favor of Debtor.
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