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Where an insufficient showing of fraud is made on a dismissal of a bankruptcy petition motion predicated on such showing, dismissal should not be granted.
Plaintiff Johns-Manville Corp., a member of the “Fortune 500,” filed for protection under Chapter 11 of Title 11 of the United States Code. Plaintiff submitted that the sole factor necessitating its filing was the mammoth problem of uncontrolled proliferation of asbestos health suits brought against it because of its substantial use for many years of products containing asbestos which injured those who came into contact with the dust of asbestos. Defendant creditors moved for the dismissal of the bankruptcy petition filed by plaintiff, alleging that plaintiff was not a "debtor" according to the Bankruptcy Code's statutory requirements, that future claims were not dischargeable, and that plaintiff had filed the petition fraudulently and without good faith.
Should the Bankruptcy Court grant defendants’ motion to dismiss the bankruptcy petition filed by plaintiff?
All of the motions were denied. Plaintiff was eligible to be a debtor under the code because plaintiff was domiciled and had its place of business in the United States, and the word "person" included an individual, a partnership, and a corporation. Moreover, the interests of future claimants did not have to be discharged to be accounted for and to be fully represented in the proceedings, so future claims would survive Chapter 11. Finally, defendants did not meet their burden of demonstrating sufficient fraud to vitiate the filing or to prove that plaintiff had acted without good faith in obtaining reorganization plan.