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New York Bankruptcy Litigation Developments in Bankruptcy Law within the State of New York and the Second Circuit

Jacoby and Meyers Involuntary Bankruptcy Proceeding

Posted in Debtor Filings

On March 14, 2014, creditors filed an involuntary bankruptcy petition against the law firm of Jacoby & Meyers in the Southern District of New York.  The law firm was formed in 2012 by the merger of two major consumer bankruptcy law firms.   An amended petition was filed on March 18, 2014.

The petitioning creditors filing the involuntary bankruptcy petition against Jacoby & Meyers include LegalZoom.com, which alleges that it is owed in excess of $1 million.

Under Section 303 of the Bankruptcy Code, a debtor can be “forced” into an involuntary bankruptcy.  If a company has 12 or more creditors, an involuntary petition requires three or more creditors whose claims are not contingent as to liability or subject to a bona fide dispute as to either liability or amount to file the petition.

If the company timely objects to the involuntary filing, for the company to be placed in bankruptcy, the company also must: generally not be paying its debts as they become due unless those debts are subject to a bona fide dispute as to liability or amount, or have had a custodian appointed within the past 120 days to take possession or control of substantially all of its assets.

The petitioning creditors are represented by the law firm of Klestadt & Winters, LLP.  Jacoby & Meyers has 21 days to respond to the petition.  The Honorable Shelley C. Chapman has been assigned the involuntary bankruptcy case.

Carl D. Neff is a bankruptcy attorney with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of New York and practices before the United States Bankruptcy Court  in the Southern and Eastern Districts of New York.  You can reach Carl at cneff@foxrothschild.com.