Court Opinion

ID: 4303469
Source: CourtListenerOpinion
Date Created: 2018-08-14 15:00:13.408387+00
Date Added: 2024-06-11T14:06:42.488957
License: Public Domain

17-1272-bk
     In re: Matthew N. Murray

 1

 2                                   In the
 3            United States Court of Appeals
 4                      For the Second Circuit
 5                                  ________
 6
 7                              AUGUST TERM, 2017
 8
 9                       ARGUED: FEBRUARY 13, 2018
10                       DECIDED: AUGUST 14, 2018
11
12                               No. 17-1272-bk
13
14                       IN RE: MATTHEW N. MURRAY.
15                       _________________________
16
17                          WILK AUSLANDER LLP,
18                           Creditor-Appellant,
19
20                                     v.
21
22                          MATTHEW N. MURRAY,
23                            Debtor-Appellee.
24                               ________
25
26              Appeal from the United States District Court
27                  for the Southern District of New York.
28           No. 1:16-cv-771 – Vernon S. Broderick, District Judge.
29            No. 14-10271 – Robert E. Gerber, Bankruptcy Judge.
30                                 ________
31
32   Before: WALKER, HALL, and LOHIER, Circuit Judges.
33                              ________
     2                                                          17-1272-bk

 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 protecting assets from

13   depletion. The district 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                                 ________

17                      ERIC J. SNYDER (Eloy A. Peral, on the brief), Wilk
18                      Auslander      LLP,  New      York,    NY,     for
19                      Creditor-Appellant.
20
21                      BRENDAN SCOTT (Tracy L. Klestadt, on the brief),
22                      Klestadt Winters Jureller Southard & Stevens, LLP,
23                      New York, NY, for Debtor-Appellee.
24                                ________
     3                                                               17-1272-bk

 1   JOHN M. WALKER, JR., Circuit Judge:

 2         Creditor-Appellant Wilk Auslander LLP appeals a judgment of

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

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

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

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

 7   Debtor-Appellee Matthew N. Murray.

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

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

10   enforcement tactic for a two-party dispute for which there were

11   adequate remedies under state law and that continuing the case

12   would not serve any bankruptcy purposes such as ensuring equal

13   distribution among creditors or otherwise protecting assets from

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

15   cause was not an abuse of discretion. This appeal followed, and we

16   AFFIRM the judgment below.

17                              BACKGROUND

18         Creditor-Appellant Wilk Auslander LLP seeks to enforce a

19   more than $19 million judgment against Debtor-Appellee Matthew N.

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

     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 Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987) (per
     curiam).
     4                                                            17-1272-bk

 1   Authority arbitration that awarded Murray’s former employer,

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

 3   New York law claims of defamation, tortious interference, breach of

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

 5         The arbitral award was subsequently affirmed by the New

 6   York State Supreme Court and the Appellate Division and augmented

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

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

 9   Auslander, as part of a settlement of outstanding fees, with any

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

11   Auslander, respectively.

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

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

14   any payments towards his debt. Wilk Auslander asserts that Murray,

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

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

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

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

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

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

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

22   (citing N.Y. Debt. & Cred. Law § 271 et seq.).
     5                                                            17-1272-bk

 1         Murray’s sole asset consists of a residential cooperative

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

 3   with his wife in a tenancy by the entirety. In February 2013, Wilk

 4   Auslander secured a lien on the shares. In February 2014, the

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

 6   apartment with their two children.

 7         In February 2014, as part of an effort to collect on its judgment,

 8   Wilk Auslander filed an involuntary bankruptcy petition against

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

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

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

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

13   recognized after the sale—rather than state law remedies that would

14   permit it to execute on Murray’s interest only. Murray moved to

15   dismiss the petition under, inter alia, 11 U.S.C. §§ 303(i) and 305(a),

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

17   the bankruptcy court to abstain from entertaining the petition.

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

19   bankruptcy court dismissed the petition sua sponte for cause under

20   11 U.S.C. § 707(a), rather than under Sections 303 or 305, holding that

21   the petition amounted to an improper exploitation of the bankruptcy
     6                                                                          17-1272-bk

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

 2   case for cause, with the determination of whether cause exists left to

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

 4   (2d Cir. 2007).

 5            The bankruptcy court identified nine factors supporting its

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

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

 8   recent battlefield in a long-running, two-party dispute; (2) Wilk

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

10   were no competing creditors; (4) there was no need for pari passu

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

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

     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), but only on a
              motion by the United States trustee.
     11 U.S.C. § 707(a).
     7                                                            17-1272-bk

 1   Auslander had adequate remedies to enforce its judgment under

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

 3   laws solely to secure a benefit—the ability to execute on both Murray

 4   and his wife’s interests in their apartment under 11 U.S.C. § 363(h)—

 5   that it does not have under non-bankruptcy law and without a

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

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

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

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

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

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

12         The bankruptcy court made the following additional

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

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

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

16   Murray’s motion to abstain under Section 305(a).

17         Wilk Auslander appealed to the district court arguing, as

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

19   petition for cause because the petition met the statutory requirements

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

21   would provide Wilk Auslander with relief not available outside of the

22   bankruptcy forum.
     8                                                              17-1272-bk

 1         The district court, concluding that the bankruptcy court did not

 2   abuse its discretion in dismissing the petition for cause, affirmed. The

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

 4   provides a sufficient means for Wilk Auslander to enforce its

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

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

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

 8                               DISCUSSION

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

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

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

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

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

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

15   reviewing the dismissal of an involuntary petition).

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

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

18   illustrative, not exhaustive. See In re Smith, 507 F.3d at 72. Courts must

19   “engage in case-by-case analysis in order to determine what

20   constitutes ‘cause’ sufficient to warrant dismissal.” In re Dinova, 212

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

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

23   all parties.” In re Smith, 507 F.3d at 72 (internal quotation marks
     9                                                              17-1272-bk

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

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

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

 4   of the parties but of the bankruptcy system.

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

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

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

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

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

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

11   were prevented from taking other measures to collect, see id.

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

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

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

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

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

17   to the sound discretion of the bankruptcy court. In re Smith, 507 F.3d
18   at 73 (internal quotation marks omitted); see also In re Krueger, 812 F.3d
19   365, 369–75 (5th Cir. 2016); 6 Collier on Bankruptcy § 707.03 [1] (Richard

20   Levin & Harry J. Sommers eds., 16th ed. 2018) [hereinafter “Collier on

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

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

23   73. A bankruptcy court abuses its discretion if its decision rests on an
     10                                                           17-1272-bk

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

 2   within the range of permissible decisions. See id.

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

 4   Wilk Auslander is a sole creditor; judgment enforcement remedies

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

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

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

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

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

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

11   and therefore affirm.

12         I.     The Bankruptcy Court Did Not Abuse its Discretion in

13                Dismissing for Cause under Section 707(a)

14         After considering the purpose of involuntary petitions, the

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

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

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

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

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

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

21   creditor. In making this determination, we conclude that the
     11                                                              17-1272-bk

 1   judgment enforcement remedies under New York law sufficiently

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

 3                A. Involuntary Petitions and Section 707(a)

 4         Most bankruptcy filings are initiated as voluntary petitions

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

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

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

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

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

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

11         Involuntary bankruptcy petitions help ensure the orderly and

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

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

14   rival creditors who beat them to the courthouse. See In re Macke Int’l

15   Trade, Inc., 370 B.R. 236, 245–46 (B.A.P. 9th Cir. 2007). Despite these

16   benefits,   involuntary     bankruptcy      petitions    have    “serious

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

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

19   embarrassment.” In re Forever Green Athletic Fields, Inc., 804 F.3d 328,

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

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

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

23   that could be abused.” Rosenberg v. DVI Receivables XVII, LLC, 835 F.3d
12                                                              17-1272-bk

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

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

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

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

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

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

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

 8   Congress provided bankruptcy courts with a variety of tools with

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

10   requirements for filing under Section 303. These statutory

11   requirements do permit single creditors to file an involuntary

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

13   In re Fischer, 202 B.R. 341, 346–48 (E.D.N.Y. 1996) (explaining why

14   some courts refuse to consider sole-creditor petitions unless there are

15   exceptional circumstances such as where the creditor has no adequate

16   alternative remedy under non-bankruptcy law). The bankruptcy

17   court, though it expressed some doubt, assumed that Wilk

18   Auslander’s petition met the Section 303 requirements without

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

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

21   this appeal that they were.

22         Even if a petition meets the statutory requirements of Section

23   303, however, a bankruptcy court may dismiss it for cause under
     13                                                                   17-1272-bk

 1   Section 707(a) after notice and a hearing. 4 See In re MacFarlane Webster

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

 3   argues that the bankruptcy court abused its discretion by dismissing

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

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

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

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

 8   they do not substantially prejudice Wilk Auslander’s interests, they

 9   better advance the interests of the debtor, the bankruptcy court, and

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

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

12   the petition.

13          Cause is a fact-specific inquiry as to which a variety of factors

14   may be relevant, including the purpose for which the petition was

15   filed and whether state proceedings adequately protect the parties’

16   interests. 5 For example, in In re C-TC 9th Avenue Partnership, we

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

18   filing was the latest move in a two-party dispute that “could be fully

     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 Section 707(a)—and therefore
     precedent interpreting it—applies to involuntary as well as voluntary
     petitions. See In re MacFarlane Webster Assocs., 121 B.R. at 696–97; 6 Collier on
     Bankruptcy § 707.03.
     14                                                              17-1272-bk

 1   resolved in a non-bankruptcy forum” and where the primary function

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

 3   10 (2d Cir. 1997).

 4         Inappropriate use of the Bankruptcy Code may constitute cause

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

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

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

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

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

10   2 Collier on Bankruptcy § 303.16.

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

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

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

14   dismiss. See In re Head, 223 B.R. 648, 653–54 (Bankr. W.D.N.Y. 1998)

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

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

17   considering the purpose for which a bankruptcy petition was filed

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

19   jurisdiction).

20         In this case, the bankruptcy court held that nine factors

21   supported dismissal for cause. Distilled to their essence, the

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

23   long-running, two-party dispute, there were no other creditors to
     15                                                           17-1272-bk

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

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

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

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

 5   distribution among competing creditors, would be served by

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

 7   bankruptcy court favor dismissal. In concluding that the bankruptcy

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

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

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

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

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

13                B. Wilk Auslander is not Substantially Prejudiced by

14                   Being Denied Access to Bankruptcy Remedies

15         Wilk Auslander argues that its interests are prejudiced by

16   dismissal because New York’s judgment enforcement remedies for

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

18   compared to remedies available under the Bankruptcy Code. We

19   conclude that New York law offers adequate remedies for Wilk

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

21   prejudiced by being denied access to bankruptcy remedies.

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

23   New York law to execute on Murray’s shares in his apartment and to
     16                                                               17-1272-bk

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

 2   Rothschild v. Lincoln Rochester Tr. Co., 212 F.2d 584, 585 (2d Cir. 1954)

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

 4   E.D.N.Y. 1991). However, neither Wilk Auslander nor any third-party

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

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

 7   of the apartment, or to inhabit the apartment. See In re Waxman, 128
8 B.R. at 51; In re Weiss, 4 B.R. 327, 330 (Bankr. S.D.N.Y. 1980).

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

10   survivorship in the apartment, she would own the apartment free and

11   clear of any third party’s interest if Murray predeceases her. See In re

12   Persky, 893 F.2d 15, 19 (2d Cir. 1989). Because of these complications,

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

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

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

16   especially when factoring in the non-debtor spouse’s age, gender, and

17   other actuarial data. See, e.g., id. at 20–21.

     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 debtor’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                                                            17-1272-bk

 1         Unlike New York law, the Bankruptcy Code permits the sale of

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

 3   co-owner in the property, including in a tenancy by the entirety. See

 4   id. at 17, 19–20. However, such sale is permitted only if, as relevant

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

 6   undivided interest would realize significantly less for the estate than

 7   sale of such property free and clear of the interests of co-owners; and

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

 9   other interests outweighs the detriment, if any, to such co-owners.

10   11 U.S.C. § 363(h). The spouse or co-owner has the right to purchase

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

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

13   expenses. 11 U.S.C. § 363(i), (j).

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

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

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

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

18   Persky, 893 F.2d at 20–21 (“non-economic factors” are relevant); and

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

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

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

22   collect remain speculative for the same reasons they are speculative

23   under New York law, as Murray’s wife’s interest may be greater than
     18                                                               17-1272-bk

 1   50 percent. See In re Levenhar, 30 B.R. 976, 979–81 (Bankr. E.D.N.Y.

 2   1983).

 3            We are therefore convinced that under these circumstances,

 4   Wilk Auslander has not shown that its interests would be

 5   substantially prejudiced if it were denied access to bankruptcy

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

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

 8   New York proceedings were inadequate in part because of the

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

10   (E.D.N.Y. 1983), aff’d, 733 F.2d 27 (2d Cir. 1984) (per curiam). In that

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

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

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

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

15            Wilk Auslander’s preference for bankruptcy remedies to solve

16   a two-party dispute cannot outweigh the lack of any other

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

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

19   relief if it can go to state court to collect a debt.”); In re Bos, 561 B.R.
20   868, 901 (Bankr. N.D. Fla. 2016) (noting that even if a creditor’s

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

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

23   Bankruptcy § 2.03 (Robert E. Ginsberg, Robert D. Martin, & Susan V.
     19                                                               17-1272-bk

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

 2   the importance of maximizing the value of a bankruptcy estate puts

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

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

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

 6   it had to resort to New York remedies.

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

 8                    System as a Whole are Advanced by Dismissal

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

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

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

12   bankruptcy system as a whole are advanced by dismissal of Wilk

13   Auslander’s petition. Murray’s interest in not participating in this

14   involuntary case is evidenced by his vigorous opposition to the

15   petition. 7

16          More importantly, the bankruptcy court appropriately

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

     7
      Wilk Auslander argues that Murray’s lack of desire or need for a discharge
     is irrelevant to whether there is cause to dismiss. Wilk 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                                                            17-1272-bk

 1   interest, in preventing parties from exploiting the bankruptcy system

 2   for non-bankruptcy-related reasons, especially when adequate

 3   remedies exist in state courts. See In re Murray, 543 B.R. at 494–95; see

 4   also In re Caucus Distribs., 106 B.R. at 927–28. Were we to ignore those

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

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

 7   increase would divert the valuable resources and attention of

 8   specialized bankruptcy courts to matters intended to be addressed in

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

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

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

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

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

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

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

16         Where continuation of a case would serve none of the

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

18   an involuntary bankruptcy petition, whose detriments for debtors are

19   meant to be balanced by benefits to creditors that would be

20   unachievable in another forum, and where the sole creditor is not

21   substantially prejudiced by remedies available under state law, the

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

23   when it declined to serve as a “rented battlefield” or “collection
    21                                                          17-1272-bk

1   agency.” See In re Murray, 543 B.R. at 493–94 (internal quotation marks

2   omitted).

3                                CONCLUSION

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

5   district court in all respects.