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Fiduciary Obligation of Debtor’s Business Nondischargeable as to Debtor

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In re Hernandez; Case No. 07-11413-RGM; March 3rd, 2008

The simple non-delivery of funds does not necessarily equate to embezzlement, larceny, or a willful and malicious injury.

However, where there is an applicable trust agreement with a corporate entity, the obligations of which are guaranteed by the debtor who is also an officer and person in control of the corporation’s operations in which the defalcation occurred, the debtor’s obligation under the guarantee agreement is not dischargeable under 11 USC § 523(a)(4).

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