A financially healthy company that is going out of business cannot file for bankruptcy solely to take advantage of a Bankruptcy Code provision that limits the amount a landlord may recover for termination of a long-term lease, the 3rd Circuit has ruled. The unanimous panel found the Delaware Bankruptcy Court had erred by rejecting a motion to dismiss the Chapter 11 filing on the grounds that it could not have been filed in good faith since the company had plenty of cash.
3rd Circuit: 'Healthy' Company Can't File Chapter 11
The Legal Intelligencer
September 22, 2004