One of the requirements for an involuntary filing is that the creditors seeking relief (referred to as “petitioning creditors”) must each have a claim that is not subject to a “bona fide dispute as to liability or amount.” This begs the question: is a partially disputed claim subject to a bona fide dispute that would deprive the creditor of standing to join an involuntary bankruptcy filing? Courts have historically reached
conflicting holdings on this question. However, courts that have recently tackled this issue have held that a
claim is subject to a bona fide dispute even where a portion of the claim is undisputed. A recent decision by the U.S. Bankruptcy Court for the Southern District of New York, in the involuntary bankruptcy cases of TV Azteca, S.A.B. de C.V. and its affiliates, is the latest to join this growing trend—even though the petitioning creditors didn’t include the disputed portion of their claims as part of the involuntary petitions!
BACKGROUND ON INVOLUNTARY BANKRUPTCY PETITIONS
Under section 303 of the Bankruptcy Code, petitioning creditors seeking to commence an involuntary bankruptcy case against a debtor must meet two requirements:
- If a debtor has twelve or more creditors, at least three creditors holding unsecured claims that total at least $18,600 in the aggregate and are not contingent or the subject of a “bona fide dispute” as to liability or amount must join in filing an involuntary petition. This is supposed to discourage creditors from using an involuntary petition to coerce a debtor to pay debts to which the debtor had legitimate defenses. This requirement was primarily at issue in TV Azteca.
- If a debtor contests an involuntary petition, section 303(h)(1) requires the petitioning creditors to prove that the debtor is generally not paying its debts that are not otherwise subject to a bona fide dispute as to liability or amount as they become due.
