In re Glob Sample Clauses

In re Glob. Ship Sys., LLC, 391 B.R. 193 (Bankr. S.D. Ga. 2007). Similar to the Lexington Hospitality case, a lender loaned a Georgia limited liability company $13.1 million and received a note and a 20% equity kicker in the form of Class B shares. The company could only filed for bankruptcy upon the consent of the Class B shares. After the company defaulted on the loan, it recognized it could not voluntarily file for bankruptcy relief due to the Class B shares and, therefore, arranged for creditors other than the lender to file an involuntary bankruptcy petition. The lender/Class B shareholder moved to dismiss the involuntary petition as a bad faith filing that was “pure subterfuge” for a voluntary petition. Relying on shareholder primacy theories imbedded in the Georgia limited liability company law, the Georgia Bankruptcy Court agreed that the involuntary petition was filed in bad faith. “An absolute waiver of the right to file bankruptcy is violative of public policy if asserted by a lender. However, since [the lender] wears two hats in this case, as a Class B shareholder, it has the unquestioned right to prevent, by withholding consent, a voluntary bankruptcy case.” Id. at 203 (citations omitted).
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