Second Circuit Affirms Slashing of Unreasonable Fees In Dismissed Involuntary Bankruptcy Case

An involuntary bankruptcy petition is a limited, risky remedy for both creditors' counsel and debtor's counsel. The fee problems encountered by counsel for the petitioners and the putative debtor in this case provide a cautionary tale.

8 minute read July 01, 2023 at 12:09 AM

Michael L. Cook

Second Circuit Affirms Slashing of Unreasonable Fees In Dismissed Involuntary Bankruptcy Case

The U.S. Court of Appeals for the Second Circuit quietly affirmed a bankruptcy court's dismissal of an involuntary petition because the petitioners' "claims were the subject of bona fide disputes within the meaning of" Bankruptcy Code (Code) §303(b)(1) (petitioner may not hold claim that is "the subject of a bona fide dispute as to liability or amount").

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