No bad blood in the bankruptcy court: Third Circuit holds that bad faith is a basis for dismissing involuntary petitions

Section 303(b)(1) of the Bankruptcy Code allows an involuntary petition to be filed by three or more creditors who hold non-contingent claims totaling at least $15,325 more than the liens on the debtor’s property.  Those creditors then must prove that the debtor was generally not paying its debts as they came due within the guidelines

Filed under:
USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Bad faith, United States bankruptcy court, Third Circuit
Location:
USA
Firm:
Weil Gotshal & Manges LLP
Judge Tosses Bad Faith Involuntary Filing Primarily Seeking Management Change

An involuntary petition under chapter 7 of the Bankruptcy Code filed against a Mississippi casino developer was dismissed for bad faith, even though the petitioning creditors met the statutory requirements for filing the involuntary case. In In re Diamondhead Casino Corporation, the U.S.

Filed under:
USA, Delaware, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Bad faith, United States bankruptcy court, US District Court for District of Delaware
Authors:
Debora Hoehne
Location:
USA
Firm:
Weil Gotshal & Manges LLP
Keep Your Fights Out of Bankruptcy Court: Bad Faith Involuntary Petitions

Creditors seeking to file an involuntary petition against a debtor may want to consider doing their due diligence before using it as a tool in their ongoing disputes with a debtor.

Filed under:
USA, Delaware, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Due diligence, Bad faith, United States bankruptcy court, US District Court for District of Delaware
Authors:
Daniel Gwen
Location:
USA
Firm:
Weil Gotshal & Manges LLP