In re: Bella Hospitality Group, LLC, 649 B.R. 200

Bella Hospitality Group, LLC (single-asset Nevada LLC) was the target of an involuntary Chapter 7 petition filed by Sphere Acquisition, LLC on February 9, 2022.
Sphere purchased a lien claim (the EVA Claim) from a Bella creditor and attached the transfer agreement to the involuntary petition but omitted the signed Rule 1003(a) statement that the claim was not transferred for the purpose of commencing the case.
Bella was served with a summons but did not file an answer or responsive motion within the 21-day period required by Rule 1011(b); the bankruptcy court entered an order for relief under § 303(h) the next day and a Chapter 7 trustee was appointed.
Months later Bella moved to dismiss, arguing the bankruptcy court lacked subject matter jurisdiction because Sphere was an unqualified petitioning creditor due to the omitted Rule 1003(a) statement and allegedly improper motive for acquiring the claim.
The bankruptcy court agreed and dismissed the case for lack of subject matter jurisdiction; the BAP reversed, holding the omission was a waivable, substantive defect under § 303(b)/Rule 1003(a) and not a jurisdictional defect, and remanded with instructions to reinstate the case and reappoint the trustee.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether omission of the Rule 1003(a) signed statement is a jurisdictional defect	Omission is a substantive § 303(b)/Rule 1003(a) filing defect and was waived because Bella failed to timely contest the petition	Omission renders Sphere an unqualified petitioner and thus deprives the court of subject matter jurisdiction; can be raised at any time	Requirements of § 303(b) and Rule 1003(a) are substantive (not jurisdictional); Bella waived the defense by not timely contesting the petition
Whether the bankruptcy court properly considered Sphere's motive and the merits of petitioning-creditor eligibility after Bella failed to timely contest	Court should not reach merits or motive once the debtor waives defenses by failing to timely respond	Subject matter jurisdiction may be raised anytime, so court could consider eligibility and motive	The bankruptcy court erred by considering untimely, waived objections; it must reinstate the order for relief and reappoint the trustee

Rubin v. Belo Broad. Corp., 769 F.2d 611 (9th Cir. 1985) (§ 303(b) requirements are substantive and waivable)
Mason v. Integrity Ins. Co., 709 F.2d 1313 (9th Cir. 1983) (debtor waives § 303(b) defects by failing to timely answer)
Arbaugh v. Y & H Corp., 546 U.S. 500 (U.S. 2006) (statutory limitations are jurisdictional only if Congress so states)
Kontrick v. Ryan, 540 U.S. 443 (U.S. 2004) (distinguishing jurisdictional rules from waivable defenses)
Trusted Net Media Holdings, LLC v. Morrison Agency, Inc., 550 F.3d 1035 (11th Cir. 2008) (§ 303(b) filing requirements are not jurisdictional and are waivable)
Adams v. Zarnel (In re Zarnel), 619 F.3d 156 (2d Cir. 2010) (§ 303 restrictions nonjurisdictional)
Kelly v. Herrell, [citation="602 F. App'x 642"] (7th Cir. 2015) (Rule 1003(a) is a filing requirement for § 303(b) and not jurisdictional)