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Involuntary Bankruptcy

Creditors, in certain circumstances, can seek to put a debtor into an involuntary bankruptcy case. This is a serious and powerful remedy. And, if successful, an involuntary bankruptcy subjects the debtor to be overseen by the federal court system and laws. A threshold issue, however, is that the creditor’s claim must not be subject to a bona fide dispute. On February 3, 2014, the Court of Appeals for the Fifth Circuit in In re Green Hills Development Co., L.L.C., — F.3d —, 2014 WL 380386 (5th Cir. 2014) affirmed a dismissal of an involuntary bankruptcy case. The Court discussed the no bona fide dispute requirement. Notwithstanding that the involuntary bankruptcy was dismissed because the creditor’s claim was held subject to a bona fide dispute and was being litigated extensively in state court prior to the involuntary bankruptcy petition, the creditor avoided sanctions. The full opinion is available here.

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Austin, TX 78701
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The firm serves its clients by listening to and understanding their needs and then providing appropriate advice and representation. In addition to general civil litigation and business law, the firm focuses on collections, bankruptcy and commercial litigation.