Tag: Involuntary Bankruptcy

Bankr. M.D.N.C.: In re Carter- Standing in Involuntary Bankruptcy; Good Faith in Filing Involuntary Bankruptcy

Summary:

The Debtor caused a fatal motor vehicle accident while under the influence and was subsequently pleaded guilty to felony death by motor vehicle. At the time of the collision, the Debtor was covered by his own insurance with State Farm and the Allstate insurance policy held by the owner of the car the Debtor was driving. The decedent’s estate settled with both Allstate, but after being unable to reach terms with State Farm, ultimately obtained a wrongful death verdict for approximately $2.8 million. When collection efforts failed, the Estate commenced an involuntary Chapter 7, with the Trustee employing special counsel to pursue automobile liability claims against State Farm and Allstate.… Read More

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Bankr. W.D.N.C.: In re Roselli- Qualifying Creditors for Involuntary Bankruptcy

Summary:

Bridgetree successfully sued, among others, Redf Marketing and its president and 50% owner, Roselli, for trade secret misappropriation, obtaining a judgment of $678,292 in federal district court. Following the entry of the judgment, Roselli and Redf made representations to the district court that they could neither post a bond nor continue operating without bankruptcy. In response, Bridgetree filed an involuntary Chapter 7 bankruptcy for Redf and Roselli, who sought dismissal of the involuntary bankruptcy.

Pursuant to 11 U.S.C. §§ 303 (b) & (h), for an involuntary bankruptcy to proceed, Bridgetree was required to show the following:

1. If the Debtor has more than twelve (12) qualifying creditors*, three holders of noncontingent, undisputed debts totaling at least $14,425 more than the value of any collateral against which a lien is held; or
2.… Read More

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E.D.N.C.: In re TP, Inc.- Involuntary Conversion of Chapter 11 to Chapter 7

Summary:

Conversion from Chapter 11 to Chapter 7 is governed by 11 U.S.C. § 1112(b), based on the best interest of the creditors and estate for cause, including:

(A) substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation;
(B) gross mismanagement of the estate;
(C) failure to maintain appropriate insurance that poses a risk to the estate or to the public;
(D) unauthorized use of cash collateral substantially harmful to one or more creditors;
(E) failure to comply with an order of the court;
(F) unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this chapter;
(G) failure to attend the meeting of creditors convened under section 341(a) or an examination ordered under rule 2004 of the Federal Rules of Bankruptcy Procedure without good cause shown by the debtor;
(H) failure timely to provide information or attend meetings reasonably requested by the United States Trustee (or the bankruptcy adminstratot, if any)
(I) failure timely to pay taxes owed after the date of the order for relief or to file tax returns due after the date of the order for relief;
(J) failure to file a disclosure statement, or to file or confirm a plan, within the time fixed by this title or by order of the court;
(K) failure to pay any fees or charges required under chapter 123 of title 28;
(L) failure to file a disclosure statement, or to file or confirm a plan, within the time fixed by this title or by order of the court;
(M) inability to effectuate substantial consummation of a confirmed plan;
(N) material default by the debtor with respect to a confirmed plan;
(O) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan; and
(P) failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of the petition.… Read More

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E.D.N.C.: In SilverDeer, L.L.C.- Attorneys’ Fees for Involuntary Bankruptcy

Summary:

Creditors filed an involuntary Chapter 7 bankruptcy for SilverDeer.  On the motion of SilverDeer, the bankruptcy court dismissed the involuntary bankruptcy finding that the pursuant to 11 U.S.C. § 303(b)(1), the claims of the creditors were subject to a bona fide dispute.  Subsequently, the bankruptcy court awarded Howard Jacobson, the manager/member of SilverDeer, his attorney fees and costs incurred defending SilverDeer, pursuant to 11 U.S.C. § 303(i).

On appeal, the District Court held that the award of attorneys’ fees to Jacobson, rather than directly to SilverDeer itself, contravened the provisions of  § 303(i)(1), which allows for such costs “in favor of the debtor”. … Read More

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