Are Creditors With Partially Disputed Claims Eligible to Join an Involuntary Bankruptcy Petition? Yes and No!

Trade and other unsecured creditors concerned about a debtor’s nonpayment of their claims may consider joining an involuntary bankruptcy petition against that debtor. However, a petitioning creditor’s eligibility to join in an involuntary bankruptcy is conditioned on its claim not being subject to a bona fide dispute.

The meaning of “bona fide dispute” has long been the subject of controversy. One of the more recently litigated issues over the meaning of bona fide dispute is whether a creditor’s partially disputed claim is subject to a bona fide dispute that would disqualify the creditor from joining an involuntary petition.