What is Involuntary Bankruptcy?
While most Denver area bankruptcies are initiated by an indebted individual or business, in some rare cases creditors themselves can force a debtor to declare bankruptcy. Involuntary bankruptcy usually involves an indebted company, not an individual.In order to force a debtor to declare involuntary bankruptcy in Denver, creditors must demonstrate that the debtor has failed to make payments on their debts. Three creditors must file the petition if the debtor has more than 12 creditors; however, a single creditor can file if there are fewer than 12.
Debtors have rights when their creditors file a petition for involuntary bankruptcy and may challenge the creditors’ claims by arguing that they were made in “bad faith.” In the case of involuntary bankruptcy, bad faith might involve the creditors’ intentions to shut down the company or to compel labor negotiations with the debtor. The debtor may receive monetary damages and attorneys’ fees if bad faith is proven.
If your business has a claim of involuntary bankruptcy filed against it, a Denver area bankruptcy attorney can help you decide on the best response. Waiting it out is a bad strategy!
