Fifth Circuit Handdowns – February 3, 2014

In the Matter of: Green Hills Development Co. – 12-60784 (published): The Court affirmed the lower court’s determination that a creditor lacked standing to bring an involuntary bankruptcy petition. While the lower court erred in its reasoning, the Court affirmed on a different basis. Because the debtor and creditor were locked in litigation in another court which could reduce the debtor’s liability to the creditor, there was a “bona fide dispute” as to the amount of the debt. Therefore, under Sec. 303(b) of the Bankruptcy Code, the creditor had no standing to drag the debtor into bankruptcy against their will.

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