Laura Davis Jones Quoted in Law360 Article on the Unanimous First Circuit Court of Appeals Opinion in HH Technology Corp’s Chapter 7 Petition

Laura Davis Jones recently spoke to Law360 about Massachusetts-based engineering firm HH Technology Corp’s involuntary chapter 7 petition, which was unanimously dismissed by the First Circuit Court of Appeals last month. In its opinion, the First Circuit clarified the existing rule that bankruptcy courts have the power to set deadlines for creditors to join an involuntary petition.

Laura tells Law360 that she was not surprised by the First Circuit’s opinion, given the decision’s high stakes.

“Involuntaries are not taken lightly by any bankruptcy court,” she says. “They just looked at the statutory language and said there’s nothing in the statute that says the court cannot set a deadline. So they went on technical grounds.”

Although HH Technology Corp shut down prior to the petition, Laura explains that even if an involuntary petition is dismissed, being dragged into bankruptcy against their will can greatly endanger businesses.

“The Bankruptcy Code provides that if you try to throw a company into a bankruptcy by an involuntary [petition] and you’re wrong, it’s actually sanctionable. So it’s taken very seriously, and that’s why you do not see that many of them,” she adds.

Laura goes on to say that although involuntary bankruptcies are infrequent, this ruling can act as an example of what may occur should a creditor put a company into Chapter 11 or Chapter 7 against its will.

“Usually you have to have your three creditors set, ready to go when you petition the court under penalty of perjury,” she concludes. “You don’t get a chance to add people later.”

Read the full article in Law360 (subscription required).