Credit Union Liquidity Service v. Green Hills Development Co. (In re Green Hills Development Co.)
- Citation:
- Credit Union Liquidity Service v. Green Hills Development Co. (In re Green Hills Development Co.), Case No. 12-60784 (5th Cir. Feb. 3, 2014)
- Tag(s):
-
- Ruling:
- The Fifth Circuit affirmed the dismissal of an involuntary bankruptcy petition. The petitioning creditor lacked standing to file a petition for involunary relief under 303(b) because its claims against the putative debtor were subject to a bona fide dispute, as shown by an extensive record of ongoing litigation between the two parties. The putative debtor's motion for sanctions was denied.
- Procedural context:
- The appeal arose from the district court's order affirming the bankruptcy court's order dismissing the involuntary petition filed agaist the putative debtor.
- Facts:
- Credit Union Liquidity Services, L.L.C. (CULS) agreed to loan Green Hills up to $14.5 million to develop approximately 403 acres of land in Mississippi. The relationship soured; CULS stopped funding; Green Hills stopped paying and filed a lawsuit against CULS in Texas state court seeking damages and an injunction. CULS filed a counterclaim for funds due under the loan agreement. While the lawsut was pending, CULS filed a petition for involuntary bankruptcy against Green Hills in the Southern District of Mississippi. After a trial, the bankrutpcy court found that CULS failed to establish that Green Hills was not generally paying its debts as they came due, and that relief under 303(h)(1) was improper because Green Hills's debt to CULS was subject to a bona fide dispute. The state court litigation remained pending throughout the bankruptcy trial and the appeal process.
- Judge(s):
- Weiner, Dennis, Owen
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