Court Opinion

ID: 8893553
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:34:36.149734+00
Date Added: 2024-06-11T17:07:20.624911
License: Public Domain

GODBOLD, Circuit Judge
(dissenting):
The purpose of § 59(g) of the Bankruptcy Act is to protect other creditors who in reliance on the pending proceeding did not file a petition of their own, against the petitioning creditors making a settlement with the bankrupt and having the petition dismissed. 3 Collier on Bankruptcy |f 59.34. In this case a hearing was convened without notice to other creditors to determine whether there had been a settlement between the principal creditor and the bankrupt and, if so, what action the court should take. The court concluded there had been a settlement agreement from which the principal creditor had backed out, and that the other three petitioning creditors were not “true and valid” creditors, and then as a penalty against the principal creditor it dismissed the proceeding without notice to other creditors. It seems to me peculiar that a statute which protects other creditors from a consummated settlement and a resulting *887dismissal would not protect them from an abortive settlement and a court-ordered dismissal imposed as a penalty against the petitioning creditor considered responsible. The interest of other creditors who may have withheld filing petitions because of the pendency of a viable proceeding is the same in both instances.