Involuntary Bankruptcy: Setting A Deadline For Additional Creditors To Join The Petition? (In re HH Technology)

By: Donald L Swanson

Question: May a bankruptcy court establish a deadline for creditors to join a pending involuntary petition?

Answer: Yes.

Such question and answer are from this informative opinion: PCC Rokita, S.A. v. HH Technology Corp. (In re HH Technology Corp.), Case No. 24-9002 (1st Cir.; decided July 24, 2025).

What follows is a summary of the U.S. First Circuit Court of Appeals opinion on such question under 11 U.S.C. § 303.

Facts

Debtor assigns its assets to Assignee for the benefit of creditors, and Assignee begins winding Debtor’s business down.

But, Creditor petitions the Bankruptcy Court to involuntarily place Debtor into Chapter 7 bankruptcy.  Creditor is the sole petitioner.

Assignee contests the involuntary petition because Debtor has more than 12 creditors but only 1 petitioner, while § 303(b) requires (emphasis added):

• “An involuntary case against a person is commenced by the filing with the bankruptcy court of a petition . . . by three or more . . . holder[s] of a claim . . . [unless] there are fewer than 12 such holders.”

Additional creditors are authorized to join an involuntary petition by § 303(c), which says (emphasis added):

• “After the filing of [an involuntary] petition . . . but before the case is dismissed or relief is ordered, a creditor . . . may join in the petition.”

So, the Bankruptcy Court sets a deadline for additional creditors to join the involuntary petition, by an Order that also provides: absent good cause, the court will deny any motions to join the petition filed after the deadline expires.

A Second Creditor joins the petition before expiration of the deadline.

Several days before the deadline expires, Creditor moves for an extension of the deadline—but this motion is denied.

After expiration of the deadline, a Third Creditor moves to join the petition, explaining why it moved to join the petition after expiration of the deadline–it did so only after learning that:

• Assignee did not obtain the necessary assents to make the assignment valid under state law;
• Debtor made large payments shortly before the petition’s filing, some of which are avoidable preferences—and Assignee does not intend to recover any of those payments; and
• one of Debtor’s principals has formed a new company to continue Debtor’s business;

Bankruptcy Court Actions

The Bankruptcy Court denies Third Creditor’s motion to belatedly join the Petition because such creditor made deliberate decisions to:

• not join the petition before the deadline expired; and
• not seek a timely extension so it could ascertain additional information about Debtor’s finances.

Then, the Bankruptcy Court holds an evidentiary hearing on Assignee’s motion to dismiss the involuntary petition.

At the beginning of the hearing, the three creditors contend that the Bankruptcy Court lacks authority to deny Third Creditor’s joinder motion, contending that a creditor can join an involuntary petition “at any time.” 

The Bankruptcy Court disagrees.  So, the evidentiary hearing proceeds, and the Bankruptcy Court dismisses the involuntary petition because, (i) Debtor has 12 or more creditors, and (ii) there are only two creditors that joined the petition in a timely manner.

Appeal

The three creditors appeal to the First Circuit’s Bankruptcy Appellate Panel, which affirms. So they appeal, further, to the First Circuit Court of Appeals.

–Creditor Arguments

On appeal, the creditors contend:

• § 303(c) allows a creditor to join an involuntary petition “at any time” before its dismissal or the entry of an order for relief; and
• since Third Creditor asked to join the petition before its dismissal, the Bankruptcy Court should have allowed that joinder and entered an order for relief.

The creditors’ argument rests principally on § 303(c), which provides (emphasis added):

• “After the filing of [an involuntary petition] but before the case is dismissed or relief is ordered, a creditor holding an unsecured claim . . . may join in the petition.”

Creditors contend that § 303(c) authorizes Third Creditor to join the petition, even after expiration of the court-ordered deadline for doing so.

–Undisputed Points

The First Circuit identifies two undisputed points.

The first point is that creditors have the right to join a “pending” involuntary petition, under the language of § 303(c)—and such a petition is “pending” from its filing until its dismissal (which disposes of the petition) or until an order for relief is entered (which adjudicates it).

The second point is that a non-party with a statutory right to intervene in a civil action does not ordinarily possess a right to do so at any time—instead, F.R.Civ.P. 24 and corresponding bankruptcy rules provide that a party wanting to intervene must do so “on timely motion.”

–Question, Argument & Analysis

So, the question becomes this: whether, in creditor joinder, (i) § 303(c) displaces Rule 24’s timely intervention requirement, and (ii) gives creditors the right to join a pending involuntary petition “at any time.”

Creditors argue that, under § 303(c):

• creditors may join an involuntary petition at any time it is pending; and
• therefore the Bankruptcy Court may not set any earlier joinder deadline.

The First Circuit declares in response: “We do not agree” and then explains why.

–Inclusion & Omission

When the Bankruptcy Code intends to give creditors a right to take action “at any time,” it uses specific language to make that intention clear:

• § 303(g), for instance, authorizes the appointment of an interim trustee upon a request made “[a]t any time after the commencement of an involuntary case under chapter 7 of this title but before an order for relief in the case.”

Such specific language requirement is not unique to § 303; instead, the use of “at any time” or similar language appears at various other places in the Bankruptcy Code—see, e.g., §§ 365(d)(2), 942, 1105, 1127(e), 1193(a), 1223(a), 1229(a), 1307(d), 1323(a), 1329(a), 1330(a).

Congress’s inclusion of the “at any time” phrase in § 303(g) and its omission of that same phrase from § 303(c) invokes the general presumption that, where Congress includes particular language in one section (in § 303(g)) but not in another section of the same statute (in § 303(c)), the disparate inclusion and omission is intentional.

–Bankruptcy Act of 1898

For a contrary view, Creditors point to decisions under the National Bankruptcy Act of 1898 that allow creditors to join a voluntary petition “at any time,” but:

• such decisions are based on this language in that old bankruptcy statute—creditors can “at any time enter their appearance and join in the petition” (emphasis added); and
• such statutory language was repealed and replaced by § 303(c), which does not contain the same “at any time” joinder language.

Creditors contend further that, despite declining to retain the phrase “at any time” in § 303(c), Congress meant to make no change from the old bankruptcy statute.  Such contention is erroneous because of the rule that, when Congress amends a statute, “we presume it intends its amendment to have real and substantial effect.” And nothing undermines that presumption here.

–Fed.R.Bankr.P. 1003(c)

Fed.R.Bankr.P. 1003 is titled, “Involuntary Petition . . . Additional Time to Join,” and its subpart (c) says:

• “If there appear to be 12 or more creditors, the court must allow a reasonable time for other creditors to join the petition before holding a hearing on it.”

The phrase “at any time” is nonexistent in Rule 1003(c)—just like § 303(c).  Instead, Rule 1003(c) requires only “a reasonable time” for allowing additional creditors to join the involuntary petition.

–Impracticality

The “at any time” position advanced by the three creditors would have “curious practical consequences.”

Bankruptcy courts enjoy substantial and important case-management authority, especially in an involuntary petition context, because the stakes are high and time is of the essence.

Yet the three creditors’ interpretation of § 303(c) would divest bankruptcy courts of an important case management tool at a critical stage in an involuntary case.  We doubt that Congress intended such a result.

–What’s Not Decided

Because the three creditors challenge only the Bankruptcy Court’s authority to set a joinder deadline, “we conclude our analysis here”—i.e., “we have no occasion to consider the circumstances under which the denial of a joinder motion filed after a joinder deadline has passed might constitute an abuse of discretion.”

Conclusion

Very interesting!

Notably, the First Circuit’s HH Technology analysis is narrow and limited to the specific facts involved and to the specific arguments raised.

Nevertheless, the HH Technology opinion provides information and analyses that will assist others who find themselves in similar circumstances.  

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