Furnier & Thomas, LLP

1 The petition was filed after the effective date of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 ("BAPCPA").
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re
FURNIER & THOMAS, LLP
Debtor
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Case No. 06-13062
Chapter 7
Judge Hopkins
MEMORANDUM OF DECISION
ON ORDER FOR RELIEF
Presently before the Court is an involuntary petition filed by Business
Information Solutions, Inc. ("BIS").1 Furnier & Thomas, LLP ("F&T") filed an
answer, contesting the involuntary petition. A trial was held on November 20, 2006.
At the trial, F&T raised the following defenses: (1) the debt that F&T allegedly owes
BIS is disputed; and (2) F&T is generally paying its debts as they become due. See
11 U.S.C. § 303(b) & (h)(1). For the reasons that follow, the Court finds that the entry
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: January 08, 2007
____________________________________________________________
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Case No. 06-13062
2 Section 303(b) provides, in relevant part:
An involuntary case against a person is commenced by the filing with the
bankruptcy court of a petition under chapter 7 . . . of this title–
(1) by three or more entities, each of which is either a holder
of a claim against such person that is not contingent as to liability or
the subject of a bona fide dispute as to liability or amount . . . if such
noncontingent, undisputed claims aggregate at least $12,300 more
than the value of any lien on property of the debtor securing such
claims held by the holders of such claims;
(2) if there are fewer than 12 such holders, . . . by one or more
of such holders that hold in the aggregate at least $12,300 of such
claims[.]
2
of an order for relief is warranted.
BONA F IDE DISPUTE
BIS contends that it is eligible to file the involuntary petition under 11 U.S.C.
§ 303(b)(2).2 Because F&T has not filed a list of creditors, pursuant to Fed. R. Bankr.
P. 1003(b), it cannot contest the sufficiency of the number of petitioners. See In re
Bowshier, 313 B.R. 232, 240-41 (Bankr. S.D. Ohio 2004) (Walter, J.) (debtors who
did not file a list of creditors waived any defense regarding the number of petitioning
creditors). Thus, the only contested issue under § 303(b)(2) is whether the claim of
BIS is "the subject of a bona fide dispute as to liability or amount."
BIS holds a state court judgment against F&T in the amount of $75,656.80 for
attorney's fees and costs. See Ex. M. F&T did not appeal the judgment. See Ex. 4.
It did seek to vacate the judgment. See Ex. E. However, the state court denied F&T's
motion to vacate. See Ex. F. F&T did not appeal the denial of its motion to vacate.
See Ex. 4.
Although it appears as though F&T has exhausted its options for disputing the
judgment, it takes the position that the claim is still disputed. 	F&T asserts that
because BIS currently seeks to supplement the judgment with additional fees and that
because F&T opposes that relief, the claim of BIS remains the subject of a bona fide
dispute. See Exs. 1 & 2. It is unclear from BIS's state court pleading whether it seeks
to modify its $75,656.80 judgment or merely seeks an additional judgment. See Ex.
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Case No. 06-13062
3 Section 303(h)(1) provides in material part:
. . . [A]fter trial, the court shall order relief against the debtor in an involuntary case
. . . only if– (continued...)
3
1. However, the only fact that is material to the § 303(b)(2) analysis is whether F&T
disputes that BIS is the holder of a claim of at least $12,300. 	See In re Demirco
Holdings, Inc., No. 06-70122, 2006 WL 1663237, at *3 (Bankr. C.D. Ill. June 9,
2006) (under BAPCPA, a bona fide dispute does not arise unless the dispute has the
potential to reduce the total of the petitioners' claims below the statutory threshold).
F&T does not dispute that it owes BIS at least $75,656.80. This is evident from
the following discussion that the Court had with F&T's counsel at the hearing.
Court: 	Don't you concede that at least a portion of the
amount has been identified?
Counsel: Yes.
. . .
Court: The fact that they are trying to amend that to
increase it doesn't bring the whole $75,000 in dispute.
Counsel: That's correct. I think the base is $75,000.
Because F&T concedes that the judgment would only increase, if modified, the Court
concludes that there is no bona fide dispute under § 303(b)(2).
GENERALLY P AYING DEBTS AS THEY BECOME DUE
F&T is a law firm that stopped practicing law in March of 2005. However, the
partnership has not been terminated under Ohio law. For the past twenty months F&T
has operated to the sole extent of winding up its affairs.
F&T contends that it is generally paying its debts as they become due, see 11
U.S.C. § 303(h)(1) 3 , because its creditors, with the exception of BIS, have been
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Case No. 06-13062
3 (...continued)
(1) the debtor is generally not paying such debtor's debts as
such debts become due . . . [.]
4 Because creditors other than BIS seem satisfied with the pace of payment,
according to Mr. Furnier, F&T argues that this is essentially a single creditor dispute
that falls within the scope of Paroline v. Doling, 116 B.R. 583 (Bankr. S.D. Ohio
(continued...)
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satisfied with the pace of payment. 	Robert R. Furnier, managing partner of F&T,
testified as follows:
But I believe since April 1st of 2005, that we've paid over $140,000 to
our creditors . . . as part of the winding-down process, so that as money
comes in, we've worked with each creditor to say, here's the money, this
is what we owe. 	And we haven't had any problem with anyone other
than a slow pay in -- not at the time of the filing -- as far as I know,
creditors have been satisfied with the pace of the payments. 	And the
only person that we've had a problem with or the only entity that we've
had a problem with is BIS . . . other than that . . . we've whittled this list
of creditors . . . down to whatever it is today, which is -- of the vendor
category, it's probably under $10,000.
Ex. A at 65-66.
To determine whether an entity is generally paying its debts as they become
due, according to the Sixth Circuit, a bankruptcy judge must consider "the proportion
of the debt being paid–both in terms of the proportion of creditors being paid and the
proportion of debt, in dollar value, being paid." In re Concrete Pumping Serv., Inc.,
943 F.2d 627, 630 (6 th Cir. 1991). 	Mr. Furnier testified that F&T has paid over
$140,000 in the past twenty months. During that same period, F&T has not paid BIS
anything and still owes BIS $75,656.80. 	See Ex. A at 82. 	Moreover, F&T owes
another creditor $55,000 for loans advanced in 2004. See Ex. A at 55. Thus, over the
course of twenty months since F&T stopped practicing law, it has paid approximately
$140,000 and still owes at least $130,656 plus the remaining vendor debt that is
"probably under $10,000" according to Mr. Furnier. Because it has taken F&T over
a year and a half to pay only half of its debts, the Court concludes that F&T is
generally not paying its debts as they become due under the standards articulated in
Concrete Pumping Serv.4
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Case No. 06-13062
4 (...continued)
1990) (Clark, J.) (articulating the general rule that "if there is but a single debt that
a debtor is not paying then the case should be dismissed, since the creditor cannot
prove the debtor is generally not paying its 'debts' as they become due"). Paroline
is distinguishable from this case because the record is clear that F&T has multiple
creditors and debts. F&T has not cited, and the Court is unaware of, any authority
for the proposition that a multiple creditor/debt case is to be treated as a single
creditor/debt case if only one of the multiple creditors is dissatisfied with the pace
of payments.
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CONCLUSION
For the foregoing reasons, the Court finds good cause for the entry of an order
for relief. An order to this effect will be entered.
Copies to:
Furnier & Thomas, LLP
One Financial Way
Suite 312
Cincinnati, OH 45242
Richard L. Ferrell
ferrell@taftlaw.com
Richard D. Nelson
rnelson@ctks.com
U.S. Trustee
ustpregion09.ci.ecf@usdoj.gov
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