Bad Faith Filing

The commencement of a bankruptcy case for an improper motive including a filing that is inconsistent with the principles and purposes of the Code.

The following have been considered to be hallmarks of a bad faith Chapter 11 filing: (1) the bankruptcy filing was prompted by what is essentially a two party dispute between the debtor and another person or entity; (2) the debtor is solvent or has relatively few unsecured creditors or little unsecured debt, and it is able to pay that debt; (3) the appearance of forum shopping in filing the bankruptcy case; and (4) the petition was filed to delay legitimate enforcement rights of a creditor without any intent to reorganize.

Bankruptcy Code ยง 1112. See also Dismissal.

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