Debtors are generally permitted to rely on the advice of counsel in order to negate the implication of fraudulent intent in their conduct. This can be relevant for issues like inadequate disclosures and resulting proceedings for denial of discharge. However, an exception to the advice of counsel applies when the need for a disclosure is “transparently plain.” In that instance, several circuit courts have held that the advice of counsel exception is not available.
The Squire Patton Boggs Sixth Circuit Blog reported this week on a recent decision in which the panel passed up an opportunity to join the other circuits in recognizing the “transparently plain” exception to the advise of counsel defense. Instead, the panel affirmed on the narrower ground that the debtor had not fulfilled the requirements necessary in order to claim the defense for reliance on advice of counsel.
For further discussion of the decision, please refer to the Squire Patton Boggs Sixth Circuit Blog.