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Involuntary Petitions Under BAPCPA

By ALM Staff | Law Journal Newsletters |
April 27, 2007

As bankruptcy practitioners awaited the enactment and effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ('BAPCPA'), the multitude of speaking panels, journals, and cocktail conversations offering their speculative commentary on the anticipated effects of the amendments to Title 11 paid increased attention to the proposed amendments' effects on the remedies afforded to creditors under ' 303 of the Bankruptcy Code ' namely the involuntary bankruptcy petition. While the changes to the text of ' 303 are minimal, the substantial changes to a debtor's eligibility requirements along with additional remedies afforded to creditors and trustees with respect to a debtor's exempt property provoked numerous questions with regard to involuntary bankruptcy petitions under the BAPCPA, and particularly in the context of individual debtors.

Oct. 17, 2005 came and went without the collapse of the bankruptcy world as we knew it, and, as with much of the commotion regarding implementation of BAPCPA, many of the questions raised with respect to involuntary petitions remain unsettled and have resulted in a split of authority amongst courts addressing such issues. In the wake of BAPCPA's implementation, the expanded remedies available to recover from a debtor's property for the benefit of the estate make involuntary petitions an increasingly attractive tool in creditors' arsenal. Additionally, BAPCPA's anticipated adversity on creditors' ability to prosecute involuntary petitions appears to have been mere conjecture, and, absent controlling precedent to the contrary, even the express changes to the text of ' 303 appear to have been much ado about nothing.

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