Supreme Court Skirts Defining ‘Bad Faith’ Involuntary Bankruptcy

The U.S. Supreme Court declined to take up a case seeking to establish what type of “bad faith” allows a court to award punitive damages against a creditor that improperly files an involuntary bankruptcy case.

The justices March 22 turned down an appeal from National Medical Imaging LLC, which also pursued the high court’s determination on whether the Seventh Amendment requires a jury trial for damages when there’s a dispute over facts surrounding an involuntary bankruptcy.

U.S. Bank NA and other creditors of National Medical filed three identical involuntary bankruptcy petitions against the imaging company. National Medical unsuccessfully sought punitive ...