In these consolidated adversary proceedings, the debtors are doctors of podiatric medicine and guarantors of their business’ debt which was secured by all assets of the business.  After the business had financial problems and closed, the debtors, without notice to the creditor, transferred the business’ assets to another podiatric group in exchange for employment offers to the debtors.  After the debtors filed Chapter 7 cases, the creditor argued their obligations were nondischargeable under 11 U.S.C. § 523(a)(4) and (6).  

The court granted the debtors’ motion to dismiss the § 523(a)(4) objections, holding that the debtors had not acted in a fiduciary capacity or embezzled the creditor’s collateral.  The court denied the debtors’ motion as to the § 523(a)(6) objection, holding that the creditor’s complaint had stated a claim for willful and malicious injury by transfer of the collateral.In re