In March 1988, Daniel E. Beren, John M. Elliot, and Edward, F. Mannino formed Walnut Street Four, a general partnership, to purchase and renovate an office building in Harrisburg, Pennsylvania. They borrowed more than $200,000 from Hamilton Bank to purchase the building and begin renovation. Disagreements among the partners arose when the renovation costs exceeded their estimates. When Beren was unable to obtain assistance from Elliot and Mannino regarding obtaining additional financing, the partnership quit paying its debts. Beren filed an involuntary petition to place the partnership into Chapter 7 Bankruptcy. The other partners objected to the bankruptcy filing. At the time of the filing, the partnership owed debts of more than $380,000 and had approximately $550 in the partnership bank account. Should the petition for involuntary bankruptcy be granted? Explain.
I have the information but I'm not sure where to begin.
An involuntary case against a person is commenced by the filing with the bankruptcy court of a petition under chapter 7 or 11 of this title—
(1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $10,000 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims;
(2) if there are fewer than 12 such holders, excluding any employee or insider of such person and any transferee of a transfer that is voidable under section 544, 545, 547, 548, 549, or 724 (a) of this title, by one or more of such holders that hold in the aggregate at least $10,000 of such claims;
(3) if such person is a partnership—
(A) by fewer than all of the general partners in such partnership; or
(B) if relief has been ordered under this title with respect to all of the general partners in such partnership, by a general partner in such partnership, the trustee of such a general partner, or a holder of a claim against such partnership; or
(4) by a foreign representative of the estate in a foreign proceeding concerning such person.
I'm not understanding this to well!
To determine whether the petition for involuntary bankruptcy should be granted in this case, we need to analyze the requirements set forth in the bankruptcy code. Specifically, we need to focus on whether the conditions outlined in Section 303 of the United States Bankruptcy Code (11 U.S.C. § 303) are met.
Section 303 states that an involuntary bankruptcy case can be initiated by three or more entities, each of which holds a claim against the debtor that is not subject to a bona fide dispute as to liability or amount, and the aggregate amount of these claims is at least $10,000 more than any liens on the debtor's property securing such claims.
In the given scenario, Walnut Street Four is a general partnership that owes over $380,000 in debts. This satisfies the requirement for the total unsecured claims against the partnership to exceed $10,000. Additionally, it is mentioned that the partnership has around $550 in its bank account, which indicates that there are no liens on the assets securing the claims.
The partners, Daniel Beren, John Elliot, and Edward Mannino, should be considered as individual entities for the purpose of determining if the petition for involuntary bankruptcy should be granted. If each partner meets the criteria specified in Section 303, they can collectively file the petition.
It is important to note that this explanation is a general analysis based on the provided information. To arrive at a definitive answer, it is advisable to consult with a legal professional who can review all relevant documents and consider any additional factors that may impact the outcome of the case.
In this case, the question is whether the petition for involuntary bankruptcy should be granted for Walnut Street Four, the general partnership formed by Daniel E. Beren, John M. Elliot, and Edward F. Mannino.
To determine if the petition should be granted, we need to look at the requirements for initiating an involuntary bankruptcy case. According to the information provided, the partnership owes debts of more than $380,000 and has approximately $550 in the partnership bank account.
Under the bankruptcy code, an involuntary case against a person (including a partnership) can be commenced by the filing of a petition by three or more entities, each of which is either a holder of a claim against the person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount. The non-contingent, undisputed claims need to aggregate at least $10,000 more than the value of any lien on the debtor's property securing those claims held by the claim holders.
In this situation, it is not specified whether there are three or more entities that meet the requirements to file an involuntary petition. It is mentioned that Beren filed the involuntary petition, but it is not clear if there are any other entities joining him in filing the petition. If there are three or more entities that meet the requirements, the first condition for filing an involuntary petition would be satisfied.
The information does mention that the other partners, Elliot and Mannino, objected to the bankruptcy filing. However, whether their objection is valid or not depends on the specific circumstances of the case and the reasons for their objection. Without additional information, it is difficult to determine the validity of their objection.
In conclusion, based on the information provided, it is uncertain whether the petition for involuntary bankruptcy should be granted for Walnut Street Four, as we do not have enough information to determine if the requirements for an involuntary petition have been met.