## Facts

- Cold Harbor Associates, L.P. owned the Cold Harbor Shopping Center and an adjacent unimproved parking-lot tract.
- ALI, Inc. held an approximately $1.475 million nonrecourse note secured by a deed of trust on the shopping center; the note had been in default since April 1992 and matured in May 1992.
- ALI filed an involuntary Chapter 11 petition against Cold Harbor on November 4, 1994 as the sole petitioning creditor.
- Cold Harbor responded by filing a voluntary Chapter 7 petition and moving to dismiss the involuntary Chapter 11.
- The bankruptcy court entered an order for relief in the involuntary Chapter 11 and dismissed the Chapter 7 case to avoid simultaneous open cases for the same debtor.
- On appeal, the district court affirmed but remanded for factual findings on the number of “holders of claims” against Cold Harbor as of the involuntary petition date, expressly reserving the ultimate question whether a sole petitioning creditor was legally sufficient.
- On remand, the bankruptcy court held an evidentiary hearing to determine creditor numerosity as of November 4, 1994.
- Cold Harbor sought to count multiple small operational debts (e.g., utilities and services) as separate claim holders for purposes of 11 U.S.C. § 303(b).
- ALI argued Cold Harbor should be barred (waiver/judicial estoppel) from asserting more than twelve creditors based on earlier litigation positions; the remand limited the bankruptcy court to fact-finding.

## Issues

1. How many “holders of claims” against Cold Harbor existed as of November 4, 1994 for purposes of 11 U.S.C. § 303(b)?
2. Whether the bankruptcy court, on the terms of the remand, could decide the legal consequences of that number (including waiver/judicial estoppel and sole-petitioner eligibility).

## Decision

- The bankruptcy court treated the remand as limiting its role to determining a factual “number” of claim holders as of the petition date.
- The court counted ALI as an undisputed creditor.
- The court evaluated asserted additional operational/trade debts creditor-by-creditor to determine whether they constituted distinct “holders of claims” as of November 4, 1994.
- The court did not decide whether ALI could proceed as a sole petitioning creditor under § 303(b), and did not rule on ALI’s waiver or judicial estoppel arguments, because those legal questions were reserved to the district court.

## Legal Principles

- Under 11 U.S.C. § 303(b), if the debtor has 12 or more creditors, an involuntary petition generally requires at least three qualifying petitioning creditors; if fewer than 12, one qualifying creditor may file.
- On remand, a lower court must follow the remand’s limits; where the appellate court requests only factual findings, legal effect and ultimate eligibility questions remain for the remanding court.
- For § 303(b) numerosity, the inquiry focuses on actual “holders of claims” existing on the petition date, not merely generalized references to payables or operations.
- In creditor-numerosity disputes, the debtor challenging a single-creditor involuntary filing bears the burden to establish that it had 12 or more creditors as of the petition date.

## Conclusion

The bankruptcy court, confined by a remand order, made factual findings on the number of claim holders against the debtor as of the involuntary petition date by counting ALI and scrutinizing asserted small operational debts to determine whether they represented distinct creditors, while leaving the legal consequences under § 303(b)—including sole-petitioner sufficiency and any estoppel or waiver arguments—to the district court.


In re Cold Harbor Assocs., L.P., 204 B.R. 904 (Bankr. E.D. Va. 1997)