Court / Judicial
Petitioning Creditor Bond
A bond a bankruptcy court can order creditors to post when they file an involuntary bankruptcy petition against a debtor.
- Required by
- U.S. Bankruptcy Courts
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
Under 11 U.S.C. 303(e), the bond indemnifies the debtor. If the court dismisses the petition, it may award the debtor costs and attorney's fees, and damages or punitive damages if the petition was filed in bad faith; the bond secures payment of those awards.
Who needs it
- Creditors filing an involuntary bankruptcy petition
- Their attorneys
What the underwriter looks at
- Amount the court orders
- Financial strength of the petitioning creditors
- Collateral offered
- Strength of the petition
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
Is this bond always required?
No. The court may require it only after notice, a hearing, and a showing of cause. The debtor usually has to ask for it.
Who sets the amount?
The bankruptcy judge sets it based on what the debtor could recover if the petition is dismissed.