One of the most drastic measures that can be taken by a creditor against the debtor when attempting to collect a debt is the use the involuntary bankruptcy petition. Section 303 of the United States Bankruptcy Code authorizes creditors, in certain situations, to request a Bankruptcy Court to declare a company bankrupt for not paying its bills. If the involuntary bankruptcy petition is granted, it is possible that the company could be liquidated to pay off creditors. The Bankruptcy Code sets forth very specific requirements that must be met in order to have a company involuntarily declared bankrupt. Because of the many possible legal complications that can come into play when filing an involuntary bankruptcy petition, creditors must exercise extreme caution and due diligence in deciding whether to proceed with such action.
A decision on whether to proceed with the filing of an involuntary bankruptcy petition should be made only after consultation with a skilled and knowledgeable attorney. The involuntary bankruptcy process is a very technical proceeding from a legal standpoint. The involuntary bankruptcy petition procedure can be a very good strategy for a lawyer to use in certain cases on behalf of creditors, and can lead to monetary recoveries which would otherwise be extremely difficult to obtain.
Mr. Adams has been successful in procuring recovery through the use involuntary bankruptcy proceedings. In one case, Mr. Adams organized and led a team of creditors with aggregate claims of $1.4 million against a debtor corporation. The judge in the case specifically recognized Mr. Adams’ role as lead counsel and noted that no assets would have been available for distribution to creditors except for his efforts. (See In re: Voicesmart Corp., 2000 WL 33950132 (Bankr. D.N.J.)).