Voluntary and involuntary cases start differently
When a debtor files its own bankruptcy petition, the filing itself generally operates as the order for relief, so no separate hearing is needed to reach that point. Involuntary cases work differently: creditors file the petition, the debtor can contest it, and the court enters an order for relief if the petition goes uncontested in time or the creditors prevail. The stretch between an involuntary filing and the order is often called the gap period, and a business usually keeps operating during it. The automatic stay generally begins when the petition is filed, not when the order is entered. Contesting an involuntary petition is time-sensitive, and the response deadline is short.
Why the date matters
Many bankruptcy deadlines run from the order for relief, including when the debtor's schedules are due and when the meeting of creditors is held. The filing date, rather than the order for relief, generally controls which tax debts receive priority and which are treated as general unsecured claims. For a business facing an involuntary petition, transactions during the gap period can receive special treatment later in the case. Keep the petition, every notice from the court, and a record of transactions made after the filing date. Tax returns and recent notices from the IRS or a state tax department are worth gathering early, because tax claims are frequently among the larger claims in a case.
Questions to answer first
If you are a creditor, we talk about how the case affects your collection efforts and how to protect your claim. If you are the debtor in an involuntary case, we look at whether there are grounds to contest the petition and what contesting it would require, or whether consenting and moving the case to a chapter you choose makes more sense. Either way, we confirm which chapter the case is under, because that shapes nearly everything that follows. We also check for related matters, such as a pending tax audit or lawsuit, that will interact with the bankruptcy timetable.
