Ninth Circuit Addresses State Sovereign Immunity for Claims Based on Dismissed Involuntary Petitions
By EsqSocial Corporation 02/10/24
When an involuntary bankruptcy petition is dismissed, section 303(i) of the Bankruptcy Code permits a debtor to seek reasonable attorneys’ fees and costs from the petitioners, and, if the petition was filed in bad faith, damages proximately caused by the bad-faith filing and punitive damages. 11 U.S.C. § 303(i). What if the petitioner is a state—say, a state taxing authority, which may seek an involuntary petition to recover allegedly unpaid taxes? Under Supreme Court precedent, states have...
By: Patterson Belknap Webb & Tyler LLP