Case Type:
Case Status:
Reversed and Remanded
NV-22-1144-BGC (9th Circuit, Mar 22,2023) Published
The 9th Circuit BAP ruled that a failure to submit the statement required under Bankruptcy Rule 1003(a), is not jurisdictional. Because the Appellee did not raise such defect in a timely manner, the BAP deemed the issue waived and reversed the bankruptcy court (D. Nev.) which had granted Appellee’s motion to dismiss the involuntary chapter 7 case for lack of jurisdiction based on Appellant’s ineligibility under 11 U.S.C.§ 303(b).
Procedural context:
The debtor moved for dismissal of the involuntary petition due to lack of jurisdiction. The debtor argued that the creditor lacked standing to file the case, which deprived the bankruptcy court from jurisdiction. According to the debtor, the creditor was not a qualified petitioner because it did not submit a signed statement stating that its claim was not transferred for the purpose of commencing the involuntary case, as required by Bankruptcy Rule 1003(a). The creditor opposed the motion to dismiss, arguing that the bankruptcy court was precluded from considering the debtor’s belated objection concerning sufficiency of the petition. According to the creditor, under Rule 1011(b), the debtor had to contest the petition within 21 days after service of the summons. Because the debtor did not do so, the creditor argued any defenses or objections were waived. The debtor replied that despite its failure to contest the petition and entry of the order for relief, subject matter jurisdiction could be raised at any time. The bankruptcy court agreed with the debtor and dismissed the involuntary petition.
In 2021, the debtor sued the City of Henderson, Ed Vance & Associates Architects ("EVA"), and others in Nevada state court for various claims. During the litigation, EVA recorded a notice of lien against two of the debtor’s three parcels. In or around January 2022, the creditor purchased EVA’s claim against the debtor. On February 9, 2022, the creditor filed an involuntary chapter 7 bankruptcy case against Bella.
BRAND, GAN, and CORBIT, Bankruptcy Judges.

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