Okamoto owed money to Hornblower & WeeksHemphill, Noyes (a law firm and hereafter Hornblower). Hornblower filed an involuntary bankruptcy petition against Okamoto, who moved to dismiss the petition on the ground that he had more than 12 creditors and the petition could not be filed by only 1 creditor. Hornblower replied that the other creditors' claims were too small to count and,

Refer to the case In re Okamoto

Case Issue

The particulars to this case are:

Debtor has more than 12 creditors A large creditor filed for involuntary bankruptcy against the debtor.

The issue is whether the one creditor can file an involuntary bankruptcy when there are more than 12 creditors. Note that 3 creditors are required to file when there are more than 12 creditors. The petition was dismissed, creditor appealed.

Relevant Terms, Laws, and Cases

See the US Code Title 11 section 303 for filing of involuntary bankruptcy. In order for a creditor to file for involuntary bankruptcy of a debtor, the number of creditors and amount owed must be looked at.

In the case of 12 or more creditors, at least 3 of the creditors who have a total of more than $10,000 must file together. Less than 12 creditors, only 1 of the creditor with amount owed of $10,000 or more may file.

Opinion

Appeals court affirmed the decision. They argued that:

It doesn't matter that the creditor had smaller claims against the debtor. When debtor has 12 or more creditor at least 3 creditor need to file.

Science only one creditor filed for the involuntary bankruptcy it was valid to dismiss his claim.