17

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1 

## In the 2 

# United States Court of Appeals 3 

## For the Second Circuit 4

________ 5

6 A UGUST T ERM , 2017 7

8 A RGUED : F EBRUARY 13, 2018 9
D E CIDED : A UGUST 14

, 2018 10

11 No. 17

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13 I N RE : M ATTHEW N. M URRAY

. 14

_________________________ 15

16
W ILK A USLANDER LLP

, 17 Creditor

- Appellant

, 18

19

v. 20

21
M ATTHEW N. M URRAY
, 22 Debtor

- Appellee. 23

________ 24

25 Appeal from the United States District Court 26 for the Southern District of New York

. 27 No. 1:16

- cv

- 771

– Vernon S. Broderick

, District Judge

. 28 No . 14

- 10271

– Robert E. Gerber, Bankruptcy Judge

. 29

________ 30

31 Before: W ALKER
, H ALL
, and L OHIER
, Circuit Judges

. 32

________ 332 17

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Creditor

- Appellant Wilk Auslander LLP appeals a judgment of 1

the United States District Court for the Southern District of New York 2

(Vernon S. Broderick, J. ) affirming the Bankruptcy Court’s (Robert E. 3

Gerber, Bankr. J. ) dismissal of the Chapter 7 involuntary bankruptcy 4

petition Wilk Auslander filed under 11 U.S.C. § 303(a) against 5

Debtor

- Appellee Matthew N. Murray. 6

The bankruptcy court dismissed for cause under 11 U.S.C. 7

§ 707(a) after concluding that the petition was simply a judgment 8

enforcement tactic for a two

- party dispute for which there were 9

adequate remedies under state law and that continuing the case 10

would not serve any bankruptcy purposes such as ensuring equal 11

distribution among creditors or otherwise protect ing assets from 12

depletion. The distr ict court affirmed, holding that the dismissal for 13

cause was not an abuse of discretion. This appeal followed

, and we 14

AFFIRM the judgment below

. 15

________ 16

E RIC J. S NYDER ( Eloy A. Peral

, on the brief )

, Wilk 17 Auslander LLP, New York, NY, for 18 Creditor

- Appellant

. 19

20
B RENDAN S COTT (Tracy L. Klestadt, on the brief ), 21 Klestadt Winters Jureller Southard & Stevens, LLP, 22 New York, NY, for Debtor

- Appellee

. 23

________ 243 17

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J OHN M. W ALKER
, J R

. , Circuit Judge : 1

Creditor

- Appellant Wilk Auslander LLP appeals a judgment of 2

the United States District Court for the Southern District of New York 3

(Vernon S. Broderick, J. ) affirming the Bankruptcy Court’s ( Robert E. 4

Gerber, Bankr. J. ) dismissal of the Chapter 7 involuntary bankruptcy 5

petition Wilk Auslander filed under 11 U.S.C. § 303(a) against 6

Debtor

- Appellee Matthew N. Murray. 7

The bankruptcy court dismissed for cause under 11 U.S.C. 8

§ 707(a) after concluding that the petition was simply a judgment 9

enforcement tactic for a two

- party dispute for which there were 10

adequate remedies under state law and that continuing the case 11

would not serve any bankruptcy purposes such as ensuring equal 12

distribution among creditors or otherwise protect ing assets from 13

depletion. The distr ict court affirmed, holding that the dismissal for 14

cause was not an abuse of discretion. This appeal followed

, and we 15

AFFIRM the judgment below

. 16

BACKGROUND 17

Creditor

- Appellant Wilk Auslander LLP seeks to enforce a 18

more than $19 million judgment against Debtor

- Ap pellee Matthew N. 19

Murray

. 1 The judgment arose out of a Financial Industry Regulatory 20

1 The facts in this section are undisputed and are derived from the bankruptcy court opinion and the parties’ motion papers. See Brunner v. N.Y. State Higher Ed uc . Servs. Corp. , 831 F.2d 395, 396 (2d Cir. 1987) (per curiam).4 17

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Authority arbitration that awarded Murray’s former employer, 1

Rodman & Renshaw LLC (“Rodman ”) , $10.7 million in damages for 2

New York law claims of defamation, tort ious interference, breach of 3

fiduciary duty, conversion, breach of contract, and prima facie tort. 4

The arbitral award was subsequently affirmed by the New 5

York State Supreme Court and the Appellate Division and augmented 6

with interest

. After filing for Chapter 7 bankruptcy, Rodman ’s estate 7

assigned the judgment against Murray to Rodman’s law firm, Wilk 8

Auslander, as part of a settlement of outstanding fees

, with any 9

recovery to be split 70/30 between the Rodman estate and Wilk 10

Auslander, respectively

. 11

Murray

, who lost his job with Rodman in November 2011 and 12

indicated to the bankruptcy court that he has no income, has not made 13

any payments towards his debt

. Wilk Auslander asserts that Murray

, 14

prior to entry of the judgment, took steps to shield his assets from 15

creditors by selling his yacht, helicopter, and car and by transferring 16

$ 169,000 from a United States bank account to an offshore 17

asset

- protection trust. The bankruptcy court , without discussing these 18

transfers in depth, pointed o ut that if they were fraudulent, they could 19

be avoided under state law without the need to file a bankruptcy 20

action

. See In re Murray , 543 B.R. 484, 487 n.15 (Bankr. S.D.N.Y. 2016) 21

(citing N.Y. Debt. & C red. L aw § 271 et seq. ). 225 17

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Murray’s sole asset consists of a residential cooperative 1

apartment in Manhattan , the corresponding shares of which he holds 2

with his wife in a tenancy by the entirety

. In February 2013, Wilk 3

Auslander secured a lien on the shares

. In February 2014, the 4

apartment was appraised at $4.6 million. The Murrays live in the 5

apartment with their two children. 6

In February 2014, a s part of an effort to collect o n its judgment, 7

Wilk Auslander filed an involuntary bankruptcy petition against 8

Murray. See 11 U.S.C. § 303. It is undisputed that Wilk Auslander’s 9

purpose in filing the petition was to take advantage of bankruptcy 10

remedies that would allow it to force a sale of the apartment

— 11

notwithstanding Murray’s wife’s interest, which would be 12

recognized after the sale

— rather than state law remed ies that would 13

permit it to execute on Murray’s interest only

. Murray moved to 14

dismiss the petition under

, inter alia

, 11 U.S.C. §§ 303(i) and 305(a), 15

with costs or damages to be awarded to Murray or , alternatively, for 16

the bankruptcy court to abstain from entertaining the petition

. 17

In January 2016, after discovery and oral argument, the 18

bankruptcy court dismissed the petition sua sponte for cause under 19

11 U.S.C. § 707(a)

, rather than under Sections 303 or 305, holding that 20

the petition amounted to an improper exploitation of the bankruptcy 216 17

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system

. 2 Section 707(a) authorizes a bankruptcy court to dismiss a 1

case for cause

, with the determination of whether cause exists left to 2

the discretion of the bankruptcy court. 3 See In re Smith , 507 F .3d 64, 73 3

(2d Cir. 2007)

. 4

The bankruptcy court identified nine factors supporting its 5

conclusion that the petition should be dismissed as an improper use 6

of the bankruptcy system : (1) the bankruptcy court was the most 7

recent battlefield in a long

- running, two

- party dispute; (2) Wilk 8

Auslander brought the case solely to enforce a judgment; (3) there 9

were no competing creditors ; (4) t here was no ne e d for pari passu 10

distribution; (5) assuming there were fraudulent transfers to be 11

avoided, Wilk Ausland er could do so in another forum; (6) Wilk 12

2 We note that although the bankruptcy court indicated that Murray had
moved for dismissal under Section 707, see In re Murray , 543 B.R. at 485 , we agree with the district court that Murray did not raise the possibility of a Section 707(a) dismissal in his moving papers; rather, the bankruptcy court raised it during the hearing

. See In re Murray , 565 B.R. 527, 530 (S.D.N.Y. 2017); Joint Appendix (“J.A.”) 362

– 63.

3 The full text of Section 707(a) reads as follows:

The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including

— (1) unreasonable delay by the debtor that is prejudicial to creditors; (2) nonpayment of any fees or charges required under chapter 123 of title 28; and (3) failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521(a), b ut only on a motion by the United States trustee.
11 U.S.C. § 707(a).7 17

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Auslander had adequate remedie s to enforce its judgment under 1

non

- bankruptcy law; (7) Wilk Auslander invoked the bankruptcy 2

laws solely to secure a benefit

— the ability to execute on both Murray 3

and his wife’s inter ests in their apartment under 11 U.S.C. § 363(h)

— 4

that it does not have under non

- bankruptcy law and without a 5

creditor community to protect; (8) no assets would be lost or 6

dissipated in the event that the bankruptcy case did not continue; and 7

(9) Murray did not want or need a bankruptcy discharge. The 8

bankruptcy court further held that a case could be dismissed for cause 9

based on the behavior of a creditor as opposed to that of a debtor 10

because Section 707(a) has no restraints to the contrary

. 11

The bankruptcy court made the following additional 12

determinations: it declined to reach the question of whether Wilk 13

Auslander filed the petition in bad fait h ; it declined to grant Murray’s 14

request for an award of sanctions; and it found no need to act on 15

Murray’s m otion to abstain under Section 305(a )

. 16

Wilk Auslander appealed to the district court arguing, as 17

relevant here, that the bankruptcy court erred in dismissing its 18

petition for cause because the petition met the statutory requirements 19

of 11 U.S.C. § 303, was not found to have been filed in bad faith, and 20

would provide Wilk Auslander with rel ief not available outside of the 21

bankruptcy forum. 228 17

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The district court

, concluding that the bankruptcy court did not 1

abuse its discretion in dismissing the petition for cause , affirmed

. The 2

district court agreed with the bankruptcy court that New York law 3

provides a sufficient means for Wilk Auslander to enforce its 4

judgment and Wilk Auslander’s inability to execute on Murray’s 5

wife’s interest under that law does not , under these circumstances, 6

justify a need for relief in bankruptcy cour t. This appeal followed. 7

DISCUSSION 8

“ We exercise plenary review over a district court’s affirmance 9

of a bankruptcy court’s decisions, reviewing de novo the bankruptcy 10

court’s conclusions of law, and reviewing its findings of facts for clear 11

error.” In re MPM Silicones, L.L.C. , 874 F.3d 787, 794 (2d Cir. 2017) 12

(internal quotation marks omitted) ; s ee also In re TPG Troy, LLC , 793 13

F.3d 228, 231 (2d Cir. 2015) ( applying the same standard when 14

reviewing the dismissal of an involuntary petition). 15

The Bankruptcy Code does not define “cause” for dismissal 16

under Section 707(a), and the statute’s three examples of cause are 17

illustrative, not exhaustive

. See In re Smith , 507 F.3d at 72. Courts must 18

“engage in case

- by

- case analysis in ord er to determine what 19

constitutes ‘cause’ su fficient to warrant dismissal

. ” In re Dinova , 212 20

B.R. 437, 442 (B.A.P. 2d Cir. 1997 ). We “determine[] whether cause 21

exists by looking at whether dismissal would be in the best interest of 22

all parties. ” In re Smith , 507 F.3d at 72 (internal quotation marks 239 17

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omitted). We conclude in this case that a similar analysis governs our 1

review of the bankruptcy court’s sua sponte decision to dismiss

. Here 2

we consider whether dismissal would be in the best interest not only 3

of the parties but of the bankruptcy system

. 4

In the usual case, the best interest of a debtor “lies generally in 5

securing an effective fresh start upon discharge and in the reduction 6

of administrative expenses ,” id. (internal quotation marks omitted)

, 7

whereas the best interest of the creditor goes to whether it is 8

prejudiced by dismissal, such as when the motion to dismiss is 9

brought after a significant amount of time , during which the creditors 10

were prevented from taking other measures to collect

, s e e i d. 11

Generally, however, creditors are not prejudiced by dismissal when 12

they may exercise their rights outside of bankruptcy. See In re Segal

, 13

527 B.R. 85, 94 (Bankr. E.D.N.Y. 2015). 14

A bankruptcy court’s decision to dismiss a case for cause under 15

Section 707(a) is guided by equitable considerations and is committed 16

to the sound discretion of the bankruptcy court. In re Smith , 507 F.3d 17

at 73 (internal quotation marks omitted) ; s ee also In re Krueger, 812 F.3d 18

365, 369

– 75 (5th Cir. 2016); 6 Collier on Bankruptcy § 707.03 [1] ( Richard 19

Levin & Harry J. Sommers eds.

, 16th ed. 2018 ) [hereinafter “ Collier on 20

Bankruptcy ”]. Accordingly, we disturb a dismissal for cause only if the 21

bankruptcy court has abused its discretion. See In re Smith , 507 F.3d at 22

7 3

. A bankruptcy court abuses its discretion if its decision rests on an 2310 17

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error of law or a clearly erroneous factual finding or cannot be located 1

within the range of permissible decisions

. See id. 2

At the outset, the following factors favor dismissal in this c ase : 3

Wilk Auslander is a sole creditor; judgment enforcement remedies 4

exist under state law; and no assets would be lost or dissipated in the 5

event the bankruptcy case d oes not continue. Wilk Auslander does 6

not dispute the existence of these factors but re sts its argument for 7

invoking bankruptcy remedies upon the premise that New York’s 8

remedies for enforcing a judgment on property owned in a tenancy 9

by the entirety do not adequately protect its interests. We disagree, 10

and therefore affirm. 11

I. The Bankruptcy C ourt Did Not Abuse its Discretion in 12

Dismissing for Cause under Section 707(a) 13

After considering the purpose of involuntary petitions, the 14

goals of the Bankruptcy Code, and a bankruptcy court’s authority 15

under Section 707(a), we are convinced that the bankruptcy court did 16

not abuse its discretion in dismissing Wilk Auslander’s petition for 17

cause because dismissal better advances Murray’s interests as a 18

debtor, furthers the interests of the bankruptcy courts and the public

, 19

and does not substantially pre judice Wilk Auslander’s interests as a 20

creditor . In making this determination, we conclude that the 2111 17

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judgment enforcement remedies under New York law sufficiently 1

protect Wilk Auslander’s interests as a sole creditor. 2

A. Involuntary Petitions and Section 707(a ) 3

Most bankruptcy filings are initiated as voluntary petitions 4

under 11 U.S.C. § 301 by a debtor seeking a fresh start. Far fewer are 5

initiated as involuntary petitions by creditors, much less a single 6

creditor, under 11 U.S.C. § 303. See Administrative Office of the 7

United States Courts, Judicial Facts and Figures, tbl. 7.2, 8

http://www.uscourts.gov/sites/default/files/data_tables/jff_7.2_0930. 9

2016.pdf (last visited Aug. 13 , 2018). 10

Involuntary bankruptcy petitions help ensure the orderly a nd 11

fair distribution of an estate by giving creditors an alternative to 12

watching nervously as assets are depleted, either by the debtor or by 13

rival creditors who beat them to the courthouse

. See In re Macke Int’l 14

Trade, Inc

. , 370 B.R. 236, 24 5

– 4 6 ( B.A.P. 9th Cir. 2007). D espite these 15

benefits, involuntary bankruptcy petitions have “ serious 16

consequences [for] the alleged debtor, such as loss of credit standing, 17

inability to transfer assets and carry on business affairs, and public 18

embarrassment

. ” I n re Forever Green Athletic Fields, Inc. , 804 F.3d 328, 19

335 (3d Cir. 2015) (quoting In re Reid , 773 F.2d 945, 946 (7th Cir. 1985) ); 20

s ee also In re Macke Int’l Trade , 370 B.R. at 246 . “By giving creditors the 21

ability to bring a debtor into bankruptcy, Congress created a power 22

that could be abused.” Rosenberg v. DVI Receivables XVII, LLC , 8 35 F.3d 2312 17

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414, 419 (3d Cir. 2016). “Such a remedy exists as an avenue of relief 1

for the benefit of the overall creditor body . . . . [ I t] was not intended 2

to redress the special grievances, no matter how legitimate, of 3

particular creditors

. . . . [Such creditors] must seek redress under state 4

law, in the state courts[,] and not in the bankruptcy court. ” In re 5

Brooklyn Res. Recovery , Inc. , 216 B.R. 470, 486 (Bankr. E.D.N.Y. 1997). 6

In part because of the unusual nature of involuntary petitions, 7

Congress provided bankruptcy courts with a variety of tools with 8

which to police their use. To begin , a petition must meet the statutory 9

requirements for filing under Section 303. These statutory 10

requirements do permit single creditors to file an involuntary 11

petition, but courts tend to scrutinize such petitions closely. See, e.g.

, 12

In re Fischer , 202 B.R . 341, 346

– 48 (E.D.N. Y. 1996) ( explaining why 13

some courts refuse to consider sole

- creditor petitions unless there are 14

exceptional circumstances such as where the creditor has no adequate 15

alternative remedy under non

- bankruptcy law). T he bankruptcy 16

court
, t hough it expressed some doubt, assumed th at Wilk 17

Auslander’s petition met the Section 303 requirements without 18

deciding the issue. On appeal, neither party disputes that the 19

requirements were met, and we assume for purposes of determining 20

this appeal that they were

. 21

Even if a petition meets the statutory requirements of Section 22

303, however, a bankruptcy court may dismiss it for cause under 2313 17

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Section 707(a) after notice and a hearing

. 4 See In re MacFarlane Webster 1

Assocs. , 121 B.R. 694, 696, 700 (Bankr. S.D. N.Y. 1990). Wilk Auslander 2

argues that the bankruptcy court abused its discretion by dismissing 3

its petition under Section 707(a) absent a finding of bad faith because 4

Wilk Auslander’s interests as a creditor will be prejudiced if it is 5

denied access to the remedies available in bankruptcy court. We 6

conclude that New York remedies are sufficient in this case because 7

they do not substantially prejudice Wilk Auslander’s interests

, they 8

better advance the interests of the debtor

, the bankruptcy court, an d 9

the public, and no other factors provide a basis for disturbing the 10

bankruptcy court’s discretionary ruling that cause existed to dismiss 11

the petition. 12

Cause is a fact

- specific inquiry as to which a variety of factors 13

may be relevant, including the purpo se for which the petition was 14

filed and whether state proceedings adequately protect the parties’ 15

interests

. 5 For example, in In re C

- TC 9th Avenue Partnership , we 16

affirmed a dismissal for cause under 11 U.S.C. § 1112(b) where the 17

filing was the latest move in a two

- party dispute that “could be fully 18

4 As the bankruptcy court noted, other chapters of the Code include similar provisions. See 11 U.S.C. §§ 930(a), 1112(b), 1208(c), 1307(c).

5 We agree with the bankruptcy court that Sec tion 707(a)

— and therefore precedent interpreting it

— applies to involuntary as well as voluntary petitions. See In re Mac F arlane Webster Assocs. , 121 B.R. at 696

– 97; 6 Collier on Bankruptcy § 707.0 3

.14 17

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resolved in a non

- bankruptcy forum” and where the primary function 1

of the petition was to serve as a “litigation tactic.” 113 F.3d 1304, 1309

– 2

10 (2d Cir. 1997)

. 3

Inappr opriate use of the Bankruptcy Code may constitute cause 4

to dismiss, and courts that consider bad faith to be cause to dismiss 5

often classify such inappropriate use as evidence of bad faith. See, e.g.

, 6

In re Forever Green Athletic Fields , 804 F.3d at 336; A tlas Mach. & Iron 7

Works , Inc. v. Bethlehem Steel Corp. , 986 F.2d 709, 716 & n.11 (4th Cir. 8

1993) (“Debt collection is not a proper purpose of bankruptcy .”); 9

2 Collier on Bankruptcy § 303.16. 10

We need not, however, classify misuse of the Bankruptcy Code 11

as b ad faith in order to accept it as cause to dismiss, particularly when, 12

as here, misuse is one of a number of factors supporting cause to 13

dismiss. See In re Head , 223 B.R. 648, 653

– 54 (Bankr. W.D.N.Y. 1998) 14

(dismissing for an “unenumerated ‘ cause ’ ”); In re Caucus Distribs., 15

Inc. , 106 B.R. 890, 923 n.43 (Bankr. E.D. Va. 1989) (collecting cases 16

considering the purpose for which a bankruptcy petition was filed 17

and noting a bankruptcy court’s right to protect the integrity of its 18

jurisdiction). 19

In this ca se, the bankruptcy court held that nine factors 20

support ed dismissal for cause. Distilled to their essence , the 21

bankruptcy court noted that Wilk Auslander’s petition was part of a 22

long

- running, two

- party dispute

, there were no other creditors to 2315 17

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protect
, an d it had been brought solely as a judgment enforcement 1

device for which adequate remedies existed in state law. The 2

bankruptcy court also noted that Murray did not want or need a 3

discharge and no other goals of bankruptcy, such as pari passu 4

distribution a mong competing creditors, would be served by 5

continuing the petition. We agree that the factors considered by the 6

bankruptcy court favor dismissal . In concluding that the bankruptcy 7

court did not abuse its discretion under the circumstances of this case

, 8

w e focus particularly on the following: (1) Wilk Auslander cannot 9

show that it will be substantially prejudiced by relying on New York 10

remedies ; and (2) the interests of the debtor and the bankruptcy 11

system as a whole would be advanced if this case were dismissed. 12

B. Wilk Auslander is not Substantially Prejudiced by 13

Being Denied Access to Bankruptcy Remedies 14

Wilk Auslander argues that its interests are prejudiced by 15

dismissal because New York’s judgment enforcement remedies for 16

property owned in a tenancy b y the entirety are not adequate when 17

compared to remedies avail able under the Bankruptcy Code. We 18

conclude that New York law off ers adequate remedies for Wilk 19

Auslander to enforce its judgment and it is therefore not substantially 20

prejudiced by being denie d access to bankruptcy remedies

. 21

As a judgment creditor, Wilk Auslander has the right under 22

New York law to execute on Murray’s shares in his apartment and to 2316 17

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cause those shares to be sold in a judgment execution sale. 6 See 1

Rothschild v. Lincoln Rochester Tr

. Co. , 212 F.2d 584, 585 (2d Cir. 1954) 2

(per curiam) (collecting cases ); In re Waxman , 128 B.R. 49, 51 (Bankr. 3

E.D.N.Y. 1991). H owever, neither Wilk Auslander nor any third

- party 4

purchaser of those shares would have the right to execute on 5

Murray’s wife’ s interest in the apartment, to force a partition or sale 6

of the apartment, or to inhabit the apartment. See In re Waxman , 128 7

B.R. at 51; In re Weiss , 4 B.R. 327, 330 (Bankr. S.D.N.Y. 1980)

. 8

Furthermore, because Murray’s wife maintains her right of 9

survivorship in the apartment

, she would own the apartment free and 10

clear of any third party’s interest if Murray predeceases her

. See In re 11

Persky , 893 F.2d 15, 19 (2d Cir. 1989)

. Because of these complications, 12

most courts conclude that a debtor’s interest in a tenancy by the 13

entirety is essentially the debtor’s own survivorship right, which 14

could be as low as 5 percent of the total value of the property

, 15

especially when factoring in the non

- debtor spouse’s age, gender, and 16

other actuarial data. See, e.g.

, id. at 20

– 2 1. 17

6 Wilk Auslander argues in its reply brief that this right is potentially illusory because New York courts may block a sale to lessen its effect on the

non

- debtor spouse. Some of the cases it cites for this concern relate to whether property may be sold, not whether a deb tor’s interest in property may be sold. See, e.g.

, Solomon Holding Corp. v. Stephenson , 989 N.Y.S.2d 22, 23 (N.Y. App. Div. 2014). Regardless, we fail to see how the New York

court’s power to account for equitable considerations differs from the bankruptcy court’s authority to do the same under Section 363(h), or otherwise makes New York remedies inadequate as a matter of law.17 17

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Unlike New York l aw, the Bankruptcy Code permits the sale of 1

both the debtor’s interest and the interest of any spouse or other 2

co

- owner in the property
, including in a tenan cy by the entirety. See 3

id. at 1 7 , 19

– 20

. However, s uch sale is permitted only if, as relevant 4

here: (1) partition in kind is impracticable; (2) sale of the estate’s 5

undivided interest would realize significantly less for the estate than 6

sale of such property free and clear of the interests of co

- owners; and 7

(3) the benefit to the estate of a sale of the property free and clear of 8

other interests outweighs the detrim ent, if any, to such co

- owners. 9

11 U.S.C. § 363(h). The spouse or co

- owner has the right to purchase 10

the property at the price at whic h a sale would otherwise be made to 11

a third party and the right to her share of the proceeds, less costs and 12

expenses. 11 U.S.C. § 363(i), (j). 13

If this case were allowed to proceed in bankruptcy court , it is 14

by no means certain that Wilk Auslander would b e authorized to sell 15

the apartment for at least two reasons: (1) the detriment to Murray’s 16

wife may be deemed to outweigh the value to the estate, see In re 17

Persky , 893 F.2d at 20

– 21 ( “ non

- economic factors ” are relevant); and 18

(2) it is unclear that any sale under Section 363 would value Murray’s 19

interest any higher than would a sale under New York law. Even 20

under a Section 363 sale, the proceeds Wilk Ausland er can expect to 21

collect remain speculative for the same reasons they are speculative 22

under New Yo rk law, as Murray’s wife’s interest may be greater than 2318 17

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50 percent. See In re Levenhar, 30 B.R. 976, 979

– 81 (Bankr. E.D.N.Y. 1

1983). 2

We are therefore convinced that under these circumstances, 3

Wilk Auslander has not shown that its interests would be 4

substantially prejudiced if it were denied access to bankruptcy 5

remedies. This case can be distinguished from In re Tsunis , in which a 6

district court, in the context of an involuntary petition, found that 7

New York proceedings were inadequate in part because of the 8

speculative value of the debtor’s interest. See 39 B.R. 977, 979 9

(E.D.N.Y. 1983 )

, aff’d , 733 F.2d 27 (2d Cir. 1984) (per curiam). In that 10

case , because four creditors filed the petition, there was a greater need 11

for the collective remedies a vailable only in bankruptcy court. See In 12

re Tsunis , 39 B.R. at 977, 979. This case, by contrast, involves only one 13

creditor and no risk of asset depletion in favor of other creditors

. 14

Wilk Auslander’s preference for bankruptcy remedies to solve 15

a two

- party dispute cannot outweigh the lack of any other 16

bankruptcy

- related purpose. See In re Nordbrock , 772 F.2d 397, 400 (8th 17

Cir. 1985) (“A creditor does not have a special need for bankruptcy 18

relief if it can go to state court to collect a debt.”); In re Bos , 561 B.R. 19

868, 901 (Bankr. N.D. Fla. 2016) (noting that even if a creditor’s 20

interests may be better served by bankruptcy remedies, the existence 21

of a state forum supports dismissal) ; s ee also Ginsberg & Martin on 22

Bankruptcy § 2.03 (Robert E. Ginsberg, Robert D. Martin, & Susan V. 2319 17

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Kelley, eds., 5th ed. 2018). And Wilk Auslander’s argument regarding 1

the importance of maximizing the value of a bankruptcy estate put s 2

the cart before the horse. T his proposed estate should not be in 3

bankruptcy court to begin with. Thus, w e conclude that Wilk 4

Auslander has not shown that it would be substantially prejudiced if 5

it had to resort to New York remedies. 6

C. The Interests of the Debtor and of the Bankruptcy 7

S ystem as a Whole are Advanced by D ismissal 8

Section 707(a) requires us to balance the competing interests at 9

stake in determining whether there is cause to dismiss. We agree with 10

the bankruptcy court that the interests of the debtor and of the 11

bankruptcy sy stem as a whole are advanced by dismissal of Wilk 12

Auslander’s petition

. Murray’s interest in not participating in this 13

involuntary case is evidenced by his vigorous opposition to the 14

petition. 7 15

M ore importantly, t he bankruptcy court appropriately 16

recognized the interest of the bankruptcy system, and thus the public 17

7 Wilk Auslander argues that Murray’s lack of desire or need for a discharge
is irrelevant to whether there is cause to dismiss. Wil k Auslander takes an overly myopic view of the interests at stake in this case. As we have already noted, involuntary bankruptcy proceedings are serious measures with drastic repercussions for the debtor. Such petitions are involuntary rather
than voluntary precisely because it is the creditor, rather than the debtor, who seeks the advantages of the bankruptcy forum. Contrary to Wilk Auslander’s contention, the interests of a debtor must be considered when determining whether cause exists to dismiss. See In re Smith , 507 F.3d at 72.20 17

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interest

, in preventing parties from exploiting the bankruptcy system 1

for non

- bankruptcy

- related reasons, especially when adequate 2

remedies exist in state courts. See In re Murray , 543 B .R. at 494

– 95 ; s ee 3

also In re Caucus Distribs

. , 106 B.R. at 927

– 28. Were we to ignore those 4

interests , we would likely see an increase of new bankruptcy filings 5

in cases that are more appropriately handled in state court. This 6

increase would divert the valuable resources and attention of 7

specialized bankruptcy courts to matters intended to be addressed in 8

state court

— a result that is antithetical to the purpose of having a 9

separate bankruptcy system in the first place. See In re Godroy 10

W holesale Co., Inc. , 37 B.R. 496, 499 (Bankr. D. Mass. 1984) ( it is 11

“obvious that the use of the bankruptcy court as a routine collection 12

device would quickly paralyze” the bankruptcy court) (internal 13

quotation marks omitted); In re Goldsmith , 30 B.R. 956, 963 (Bankr. 14

E.D.N.Y. 1983). 15

Where continuation of a case would serve none of the 16

Bankruptcy Code’s goals or purposes, including the specific goals of 17

an involuntary bankruptcy petition, whose detriments for debtors are 18

meant to be balanced by benefits to c reditors that would be 19

unachievable in another forum

, and where the sole creditor is not 20

substantially prejudiced by remedies available under state law, the 21

bankruptcy court did not abuse its discretion under Section 707(a) 22

when it declined to serve as a “ rented battlefield” or “collection 2321 17

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- bk

agency.” See In re Murray , 543 B.R. at 493

– 94 ( internal quotation marks 1

omitted )

. 2

CONCLUSION 3

For the foregoing reasons , we AFFIRM the judgment of the 4

district court in all respects

. 5