First Circuit adopts strict reading of numerosity requirement for involuntary petitions.

In In re Edgar A. Reyes-Colon, Nos. 17-1971, 17-1972, (1st Cir. April 24, 2019), the First Circuit rejected the contention advanced by the two creditors that filed an involuntary petition against a debtor with more than twelve creditors, that there is an equitable exception to the three creditor requirement under Section 303 when there are allegations that the debtor defrauded his creditors.

Relying upon Siegel v. Law, 571 U.S. 415 (2014), the First Circuit held that "bankruptcy courts 'may not contravene specific statutory provisions' when they exercise their statutory and inherent powers" and that "allowing the case to proceed with only two petitioning creditors would have flown in the face of the Code's directive that there be three petitioning creditors when a debtor has more than twelve creditors at the time the involuntary petition was filed."

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