Alan N. Resnick, Benjamin Weintraub Distinguished Professor of Bankruptcy Law, co-authored the following New York Law Journal article.
Involuntary Bankruptcy Filings: Raise Timely or Risk Waiver
New York Law Journal
By Jean E. Hanson and Alan N. Resnick
March 23, 2009
Bankruptcy relief is usually sought voluntarily by financially troubled companies seeking to reorganize or liquidate their businesses. However, the Bankruptcy Code also makes bankruptcy relief available as a creditor’s remedy. In an economic downturn, frustrated creditors are likely to resort to involuntary bankruptcy relief with greater frequency as a way to protect or maximize the value of their recoveries against defaulting debtors with depreciating or disappearing assets.
Eligibility requirements for filing a voluntary bankruptcy petition are few and access to the bankruptcy system is relatively easy; having a residence, domicile, property, or a place of business in the United States is all that is required for most entities.1
However, recognizing the need to give creditors the ability to force an unwilling debtor into a liquidation or reorganization under the protection of the Bankruptcy Code where justified by the circumstances, while also recognizing that debtors need protection from unwarranted and stigmatizing involuntary petitions, Congress struck a balance by imposing strict requirements for the filing of involuntary petitions.