{"id":1584,"date":"2024-07-02T21:27:34","date_gmt":"2024-07-02T21:27:34","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/bankruptcy-involuntary-petition-joinder\/"},"modified":"2024-07-02T21:27:34","modified_gmt":"2024-07-02T21:27:34","slug":"bankruptcy-involuntary-petition-joinder","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/bankruptcy-involuntary-petition-joinder\/","title":{"rendered":"Bankruptcy \u2013 Involuntary petition \u2013 Joinder"},"content":{"rendered":"\n
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Where a U.S. Bankruptcy Court judge dismissed an involuntary bankruptcy petition, that decision should be affirmed because the appellants\u2019 assignments of error reflect a misunderstanding of the procedure for contesting an involuntary petition.\n<\/p>\n

\u201cThis appeal presents challenges by three creditors of HH Technology Corp. (\u2018HHT\u2019) to the dismissal of the involuntary bankruptcy petition filed against HHT (the \u2018Dismissal Order\u2019) and several interlocutory orders that merged into that order. The challenges center on numerosity \u2014 the number of creditors of the alleged debtor, which in turn dictates the number of petitioning creditors required to commence the involuntary proceeding below. According to petitioning creditors, PCC Rokita S.A. (\u2018Rokita\u2019) and Shanghai Morimatsu Chemical Equipment Co., Ltd. (\u2018Morimatsu\u2019), and would-be petitioning creditor, DFT Properties, LLC (\u2018DFT\u2019) (together, the \u2018Appellants\u2019), the bankruptcy court erred by preventing the joinder of DFT, thus leaving too few creditors to commence an involuntary bankruptcy under \u00a7303(b)(1). They argue, alternatively, that the bankruptcy court erred by including too many creditors in the count, rendering impossible the commencement of an involuntary bankruptcy by fewer than three creditors under \u00a7303(b)(2). \u2026\n<\/p>\n

\u201cHere, DFT knew of the May 23, 2022 joinder deadline when it initially opted not to intervene and instead waited until approximately eight weeks after the expiration of that deadline to file its Joinder Motion. \u2026<\/p>\n

\u201cIn light of the foregoing, we discern no error in the denial of DFT\u2019s untimely joinder request. \u2026\n<\/p>\n

\u201cEssentially, the Appellants raise three challenges to the Dismissal Order: (1) as a rule, bankruptcy courts should not consider affirmative defenses to avoidability in the context of a motion to dismiss an involuntary petition; (2) even if it were generally appropriate to consider such defenses, in this case, HHT\u2019s failure to plead them should have barred the bankruptcy court from considering them; and (3) in any event, the bankruptcy court erred by placing upon Rokita and Morimatsu the burden of proving that those defenses were unavailable to certain of the listed creditors. These assignments of error reflect a misunderstanding of the procedure for contesting an involuntary petition and, more particularly, the effect of shifting burdens in such contests. \u2026\n<\/p>\n

\u201cFor the reasons set forth above, the orders of the bankruptcy court properly preserved for this appeal \u2014 the Joinder Deadline Order, the Order Denying Joinder Motion, and the Dismissal Order \u2014 are affirmed.\u201d<\/p>\n

In Re: HH Technology Corp. (Lawyers Weekly No. 03-005-24) (30 pages) (Cary, J.) Appealed from a decision by Bostwick, J., in the U.S. Bankruptcy Court for the District of Massachusetts. Ilyas J. Rona on brief for appellants PCC Rokita S.A., Shanghai Morimatsu Chemical Equipment Co., Ltd., and DFT Properties, LLC; D. Ethan Jeffery, Christopher M. Condon and Francis C. Morrissey on joint brief for the appellees (BAP NO. MB 23-012) (June 17, 2024).<\/i>\n<\/p>\n

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