It isn’t often that a bank loses to the judgment of a bankruptcy court. Involuntary bankruptcy petitions often arise when creditors seek collection from a debtor, typically ending up in favor of the creditor. However, a recent Florida bankruptcy case has upheld the original decision that denied U.S. Bank their claim against a Miami businessman.
Order In The Court
Maury Rosenberg was forced into involuntary bankruptcy by Minneapolis-based U.S. Bank over debt obligations. Estimated to owe $4.9 million in personally guaranteed debts used to fund operations for his company, National Medical Imaging, U.S. Bank sought collection through bankruptcy court. However, the initial petitions were thrown out by the court, citing that involuntary bankruptcy for purposes of debt collection violated federal law.
U.S. Bank has since lost two appeals to the initial petition filings, but continues to settle the dispute. Last week, a jury awarded Rosenberg $6 million in punitive damages for suffering through the illegal pursuit of involuntary bankruptcy. The recent damages are the largest in U.S. history for such a case, to which the outcome is still being met by opposition from U.S. Bank. The bank is planning another appeal.