In re Alta Title Co., 55 B.R. 133 (Bankr.D.Utah)
PUBLISHED
A single creditor filed an involuntary chapter 7 petition against debtor, indicating that debtor had fewer than 12 holders of non-contingent claims. On debtor's motion asserting that it had approximately 150 creditors, the court allowed creditor time to amend its petition to add at least 2 more creditors, which it did. Superseded non-judicially appointed trustee for debtor requested that the court clarify whether the commencement date of the bankruptcy was the filing date of the single creditor petition, or the date the amended petition was filed. The court determined, first, that the 3-petitioning creditor requirement was not jurisdictional. The court then applied a version of the good faith test to creditor's initial petition, which required it to consider both creditor's pre-filing inquiry and its subjective purpose for filing, on which debtor bears the burden of proving bad faith. Finally, the court determined that, since the initial petition was not insufficient on its face and was not filed in bad faith, the defect in the initial petition was cured either by the other creditors' filing of their own involuntary petition, or by the filing of an amended petition that named all 3 creditors, and that the joinder related back to the initial filing date.