If an involuntary bankruptcy proceeding is initiated in bad faith, then a court may award damages for injuries caused to the debtor's reputation.

Question

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If an involuntary bankruptcy proceeding is initiated in bad faith, a court may not only dismiss the petition but also order the petitioner to pay damages for the debtor's reputation, costs incurred in defending the petition, and other losses caused by the filing.

If an Involuntary Bankruptcy Proceeding Is Initiated in Bad Faith