668 B.R. 517
Bankr. D. Del.2025Background
- PTGi International Carrier Services, Inc. (PTGi), a Delaware corporation in winddown with no ongoing operations, was named an alleged debtor in an involuntary Chapter 7 bankruptcy petition by three petitioning creditors: Acmetel USA, Inc., Omantel International, and TM Technology Services Sdn. Bhd.
- All three petitioning creditors held uncontested claims for unpaid telecommunications services, aggregating more than the statutory threshold.
- Arena (Amped I, LLC and Amped II, LLC) is a secured creditor with a perfected, uncontested first-priority security lien on all PTGi's remaining assets, following Charge Enterprises, PTGi’s parent, defaulting on a loan agreement.
- Prior to the petition, Acmetel sued PTGi in the Southern District of New York and obtained a judgment, but never perfected a judgment lien and remained unsecured; Arena successfully enforced its security interest, supported by the District Court.
- Acmetel and co-creditors filed the involuntary petition on the last day for Acmetel to appeal the New York decision vacating its restraining notice on PTGi’s bank funds.
- PTGi moved to dismiss the involuntary petition, arguing it was filed in bad faith; the motion was joined by Arena and opposed by the petitioning creditors.
Issues
| Issue | Acmetel's Argument | PTGi's Argument | Held |
|---|---|---|---|
| Bad faith filing of involuntary petition | Petition filed for benefit of all creditors; seeks bankruptcy investigation and potential equitable subordination of Arena | Filed as litigation tactic for Acmetel's benefit after adverse NY ruling and as substitute for debt collection | Petition dismissed; bad faith found |
| Numerosity requirement (three petitioning creditors) | Numerosity present at time of filing (three creditors) | If Acmetel dismissed for bad faith, only two remain, numerosity not met | Petition dismissed; requirement not met |
| Consideration of Arena’s joinder | Arena lacks standing as non-petitioning creditor | Joinder proper; not seeking to contest petition directly | Joinder considered, but court did not rely on Arena’s argument |
| Award of attorneys’ fees | Fees not warranted | Fees should be awarded due to bad faith filing | Attorneys’ fees awarded to PTGi |
Key Cases Cited
- In re Forever Green Athletic Fields, Inc., 804 F.3d 328 (3d Cir. 2015) (establishes totality-of-the-circumstances test for bad faith in involuntary petitions)
- In re Metrogate, LLC, 2016 WL 3150177 (Bankr. D. Del. May 26, 2016) (applies bad faith and numerosity analysis in involuntary bankruptcy context)