Call me crazy, but I think the company has a chance to beat this.
What a hoot
if the petitioning creditor proves that “the debtor is generally not paying such debtor’s debts
I can picture Ed in front of the Judge now;
Judge: "Mr. Marshall, can you prove the debtor is not paying the debtor's debts".
Marshall: "Yes, your honor, I'm the one who stiffed them."
Here's how they beat it
Petitioners trying to prove this element must do more than establish that the debtor “is not meeting its debts as they mature.” ....... The failure to meet debts must be relevant to the debtor’s delinquency. Four commonly used factors in evaluating relevance are: (1) number of unpaid claims; (2) amount of such unpaid claims; (3) materiality of the nonpayment; and (4) the debtor’s overall conduct of its financial affairs.
It seems MZEI has a good argument for (4), they publically announced a plan to raise money in part to pay of its debts via authorization of new shares to be voted on at the shareholders meeting. seems like good conduct to me.
Moreover,
Bad Faith
The purpose in allowing for involuntary bankruptcy is to provide creditors with a remedy in instances where obtaining a remedy is impracticable outside of bankruptcy.
The remedy for Marshall to be paid was raising money through the issuance of new shares. What was impractical with that...
Seems to me there is a case to be made for this action to be rejected. Only question is will the company fight or lay down....
