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Showing 6 posts in For Cause / Bad Faith.

Delaware Bankruptcy Court Sidesteps Decision on “Novel” Bar to Joinder Doctrine; Movant Failed to Demonstrate Bad Faith For Involuntary Chapter 7 Petition

In re Luxeyard, Inc., 556 B.R. 627 (Bankr. D. Del. 2016)

Declining to opine upon the “bar to joinder doctrine,” the Delaware Bankruptcy Court in this Opinion applied the Third Circuit’s “totality of the circumstances” bad faith test to deny a motion to bar the joinder of additional petitioners to an involuntary petition under Section 303(c) of the Bankruptcy Code.  Simply put, the Debtor did not carry its burden to show there was a bad faith filing, and therefore, the Court need not consider the bar to joinder doctrine. Read More ›

Court Dismisses Involuntary Chapter 11 Case on Findings of Bad Faith and Failure to Meet Standards under Section 303

In re Metrogate, LLC, No. 15-12593 (KJC), 2016 WL 3150177 (Bankr. D. Del. May 26, 2016), (with note regarding In re Diamondhead Casino Corp., No. 15-11647 (LSS), 2016 WL 3284674 (Bankr. D. Del. June 7, 2016))

In this Opinion, the Delaware Bankruptcy Court dismissed an involuntary chapter 11 case against Metrogate, LLC f/k/a Advance Realty Group, LLC (“Metrogate”) on findings that it failed to meet the standards under section 303 of the Bankruptcy Code and was filed in bad faith.  Judge Kevin J. Carey’s ruling clarified statutory requirements under section 303 and confirmed bad faith as an independent ground for dismissal of involuntary cases under the Third Circuit’s holding in In re Forever Green Ath. Fields, Inc., 804 F.3d 328 (3d Cir. 2015). Read More ›

Third Circuit Holds That Bad Faith Determined by the Totality of the Circumstances Provides an Independent Basis for Dismissing an Involuntary Petition

In re Forever Green Athletic Fields, Inc., No. 14-3906, 2015 WL 6080665 (3d Cir. Oct. 16, 2015)

Despite no dispute that the petitioning creditors satisfied the statutory requirements for commencing an involuntary chapter 7 proceeding under section 303(b)(1) of the Bankruptcy Code and that the putative debtor was not paying its debts as they came due, this precedential Opinion of the Third Circuit Court of Appeals adopted the “totality of the circumstances” standard for determining bad faith under section 303 and affirmed the decisions of the lower courts that dismissed the proceeding as a bad faith filing. Read More ›

UPDATE – Scarborough-St. James Corp. Case Dismissed For Cause, Substantive Rulings Survive Dismissal

In re Scarborough-St. James Corp., No. 15-10625 (LSS), 2015 WL 5672628 (Bankr. D. Del. Sept. 24, 2015)

With the Landlord* receiving Bankruptcy Court approval to continue its previously stayed litigation against the Debtor in Michigan state court, the Debtor moved to dismiss its bankruptcy case for cause under Bankruptcy Code § 1112(b)(1), alleging no remaining purpose existed by having the Debtor remain in bankruptcy.  The Court granted dismissal, finding that this two-party dispute is properly litigated in state court and it is unlikely that the Debtor will be able to rehabilitate under the Bankruptcy Code.  Op. at 3. Read More ›

The Baha Mar Debtors Sent Packing Back To The Bahamas

In re Northshore Mainland Servs., Inc., 2015 WL 5444707, Case No. 15-11402 (KJC), --- B.R. ---- (Bankr. D. Del. Sept. 15, 2015)

In His Honor’s most recent Memorandum, Judge Carey dismissed the chapter 11 cases of the Baha Mar debtors (the “Debtors”), except as to one—Northshore Mainland Services, Inc, which is a Delaware corporation with operations in the United States.  Despite the Court’s acknowledgment of the significant benefits to all parties in proceeding with a restructuring under chapter 11, the Court appeared constrained to rule that all parties would be best served by dismissal under Bankruptcy Code section 305(a). Read More ›

Bankruptcy Court Dismisses Single Asset Case For Cause, Possibility of Refiling Left Open

In re PEM Thistle Landing TIC 23, LLC, Case No. 13-13273 (KG), 2014 WL 1319183 (Bankr. D. Del. Apr. 2, 2014)

In this Memorandum Opinion, Judge Gross dismissed the single asset chapter 11 bankruptcy case of PEM Thistle Landing TIC 23 (the “Debtor”) for cause, but did not make a finding of bad faith because the Debtor’s commencement of its proceeding to preserve its sole asset from foreclosure constituted a valid business purpose underlying the filing. Read More ›