HELP THE WORLD BANKRUPT CROOKED GOOGLE, TWITTER, FACEBOOK AND TESLA
election rigging companies Google, Twitter, Facebook and Tesla can be
forced out of business. Here is one of the ways to do it. When a company
is facing financial distress, the question often comes up whether
creditors can "force" the company into bankruptcy. Although
the answer is more complicated than it may seem, this post aims to
sort out what being "forced into bankruptcy" really means (hint:
there are two different ways this can happen) and why it matters to
companies and creditors.
But Voluntary Bankruptcy. When a company is "forced"
into bankruptcy, often what actually has happened is
that the company filed a voluntary bankruptcy petition under Chapter
11 (reorganization) or Chapter 7 (liquidation) of the U.S.
Bankruptcy Code in response to creditor actions. For example,
a secured lender may have declared a default under its loan documents
and commenced foreclosure proceedings, or an unsecured creditor may have
filed a lawsuit or obtained a judgment against the company. In
response, the company filed bankruptcy.
it may be fair to describe the company as having been "forced" into
bankruptcy, technically the company’s board of directors made a voluntary
decision to file bankruptcy given the company’s financial
circumstances or creditor actions. The distinction is important
because a voluntary bankruptcy filing puts the company in
bankruptcy immediately, making it subject to the Bankruptcy Code’s
provisions and the bankruptcy court’s supervision. In contrast, the other
kind of bankruptcy — an involuntary bankruptcy filing — does not.
Involuntary Bankruptcy. This begs the question: if the
company does not consent, can creditors literally force a company into
bankruptcy anyway? The answer is yes, under certain circumstances, and
subject to meeting the requirements for filing an involuntary
bankruptcy petition. The major requirements, discussed
below, are found in Section
303 of the Bankruptcy Code.
number of creditors. The Bankruptcy Code specifies the minimum
number of creditors and amount of their claims:
a company has 12 or more creditors, an involuntary bankruptcy
petition requires (a) three
or more creditors whose claims are not
contingent as to liability or subject to a bona fide dispute as to
either liability or amount to file the petition, and (b) those
qualifying claims must total, in the aggregate, at
least $14,425 if unsecured or
$14,425 more than the value of any liens securing those claims if
any are secured.
the company has fewer than 12 creditors, it only takes one qualifying creditor to
file an involuntary petition.
creditors can join the petition later, and if only one creditor
files and it turns out that the company has more than 12 creditors,
the bankruptcy court will give other creditors an opportunity to
$14,425 amount is adjusted every three years, with the next
adjustment due in April 2013.
Not Paying Debts. If the company timely objects to the involuntary
filing, for the company to be placed in bankruptcy, the company
- generally not be paying its debts
as they become due unless
those debts are subject to a bona fide dispute as to
liability or amount, or
had a custodian appointed within the past 120 days to take
possession or control of substantially all of its assets.
The Chapter. In the involuntary petition, the petitioning
creditors must designate which bankruptcy chapter (Chapter 7 or 11) into
which they seek to force the company.
How Is An
Involuntary Different? When an
involuntary petition is filed, the automatic
stay of bankruptcy kicks in immediately to prevent
creditor actions, but that’s where the similarities with voluntary
a voluntary bankruptcy filing, when an involuntary bankruptcy
petition is filed, a company is not immediately placed into bankruptcy
and the company may continue to operate its business and use,
acquire, or dispose of its property as if an involuntary bankruptcy case
had not been filed.
an involuntary bankruptcy petition functions more like a complaint
asking the court to declare that the company should be put into
bankruptcy. Like a complaint, the involuntary petition must be served together with
the bankruptcy court has the authority to appoint an interim trustee or
order other restrictions on the company, those do not automatically
apply, have to be sought by motion, and may be denied by the bankruptcy
company can consent to the involuntary bankruptcy filing. When an
involuntary Chapter 7 filing is made, the company can also respond
with its own voluntary Chapter 11 filing and take control over the case
as a debtor in possession.
contest an involuntary petition, the company must do so within the
time allotted by the Federal Rules of Bankruptcy Procedure, currently 21
days after service of the summons. Typically that involves filing an
answer or a motion to dismiss.
- Litigation over
whether the requirements discussed above have been met, and thus whether
the company should be put in bankruptcy, can involve various
pleadings, document and deposition discovery, status conferences,
motions for summary judgment, and/or an evidentiary hearing
the bankruptcy court ultimately rules in favor of the petitioning
creditors, an "order
for relief" is entered and the company is officially placed into
bankruptcy. At that point, the company is subject to the Bankruptcy
Code’s provisions and supervision by the bankruptcy court.
The Involuntary Fails? Filing an
involuntary bankruptcy petition against a company is, of course, serious
business, and the consequences of failing are equally serious.
filed, an involuntary petition cannot be dismissed without a notice and
an opportunity for a hearing, even if the petitioning creditors and the
the involuntary petition is dismissed, the petitioning creditors can be
liable for costs and attorney’s fees of the company.
the bankruptcy court determines that the involuntary petition was filed
in bad faith, the petitioning creditors can be liable as well for
damages caused by the involuntary filing and even for punitive damages.
Creditors Typically File An Involuntary? The
prospect of creditor liability for costs, attorney’s fees, damages, and
possibly punitive damages makes involuntary petitions one of the
lesser-used creditor tools. Involuntary bankruptcy is most often used when
unsecured creditors suspect fraud on the part of a company, such as
when a Ponzi scheme is discovered, or for some other
extraordinary reason. Otherwise, creditors will typically pursue
collection of their own claims directly, including through litigation in
state or federal court. That might end up "forcing" the company into
bankruptcy, but technically it would be a bankruptcy of the voluntary