Most observers of the world of chapter 11 bankruptcy cases – and particularly those professionals who practice in that arena – will not be surprised to learn that their individual experiences and anecdotal reports suggesting that the duration of Chapter 11 cases has continued to shrink have been validated by Fitch Ratings, one of the “big three” credit rating agencies. Fitch’s August 7, 2018 report, entitled “Shrinking Length of U.S. Bankruptcies,” provides many useful statistics and analyses of recent and historical trends in chapter 11 cases.

In a decision last month in Whyte v. SemGroup Litig. Trust (In re Semcrude L.P.), No. 14-4356, 2016 U.S. App. LEXIS 7690 (3d Cir. Apr. 28, 2016), the United States Court of Appeals for the Third Circuit held that proving that a debtor was left with unreasonably small capital will not turn on either hindsight or a “speculative exercise” based on what might have happened if certain things were known at the time.

Many a bankruptcy attorney has been approached by an angry client who is owed a large amount from, or has obtained a judgment against another party, but has been frustrated in efforts to collect and wants to “throw them into bankruptcy.”  After trying to calm the client down, the attorney will go over the technical requirements for commencing an involuntary bankruptcy case and will undoubtedly carefully explain the financial risks that lie in wait in the event that the putative debtor opposes the bankruptcy and is successful in having it dismissed.  Specifically, section 303(j) of