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Summarizing by Lars Fuller

Auslander v. Murray

Case Type:
Case Status:
17-1272 (2nd Circuit, Aug 14,2014) Published
Bankruptcy Court did not abuse its discretion in sua sponte dismissing a single creditor involuntary petition for cause, under 11 U.S.C. 707(a). Bankruptcy Court was being used as a collection device. Creditor had adequate remedies in state court and dismissal advanced bankruptcy system. Bankruptcy Court did not have to find involuntary in "bad faith" to dismiss under 707(a)
Procedural context:
Appeal from District Court affirming Bankruptcy Court's sua sponte dismissal of a single creditor involuntary petition.
Petitioner held $19,000,000 judgment against alleged debt0r. Debtor made fraudulent transfers of assets to wife and owned home as tenants by entireties. Petitioner admitted filing involuntary as collection device and to use 11 U.S.C. 363(h) to sell debtor's home free of wife's entireties interest. Debtor moved for orders dismissing case or abstaining, 11 U.S.C. 303(i), 305(a). Bankruptcy Court sua sponte dismissed, under 11 U.S.C. 707(a). after applying nine-factor analysis.. Court of Appeals focused on: a) petitioner having adequate remedies in state court; and b.) dismissing petition which sought to use bankruptcy system a collections device advanced the bankruptcy system.
Walker, Hall, and Lohier, Circuit Judges

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