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Bad Faith Involuntary Bankruptcy

Patterson Belknap Webb & Tyler LLP

Eighth Circuit Issues Decision on Involuntary Bankruptcy Case and Damages Arising from a Bad Faith Filing

An appeals court has issued an insightful decision on the availability of damages when an involuntary bankruptcy petition is filed in bad faith. See Stursberg v. Morrison Sund PLLC, No. 23-1186, 2024 U.S. App. LEXIS 20286...more

Dechert LLP

Non-Debtor Awarded Sanctions for an Improper Filing of an Involuntary Petition

Dechert LLP on

Section 303(i) of the Bankruptcy Code authorizes the court to award the debtor sanctions on account of an improper filing of an involuntary petition against it. But can a non-debtor third-party obtain such a relief? Yes, says...more

Patterson Belknap Webb & Tyler LLP

Punitive Damages for Involuntary Bankruptcy Petitions Filed in Bad Faith are Ineligible for Setoff

We generally advise clients to think carefully before commencing an involuntary bankruptcy petition against an alleged debtor. One of the primary reasons for our caution is section 303(i) of the Bankruptcy Code, which...more

Cole Schotz

Petitioning Creditors Beware: No Right To Setoff For Punitive Damages From Bad Faith Involuntary Bankruptcy Filings

Cole Schotz on

Creditors often think that an involuntary bankruptcy petition is a great bargaining chip when faced with a recalcitrant debtor. However, the actual filing of an involuntary bankruptcy petition (when that petition is filed in...more

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