Law360, New York ( July 23, 2015, 4:10 PM EDT) -- A bankruptcy court must dismiss a creditor's involuntary bankruptcy petition when the debtor has raised a "legitimate basis" for disputing the petitioning creditor's underlying claim, held the U.S. Court of Appeals for the Second Circuit on July 14, 2015. In re TPG Troy LLC, at *5 (2d Cir. July 14, 2015). The Second Circuit also affirmed the bankruptcy court's award of $513,427 in attorneys' fees and costs to the vindicated debtor under Bankruptcy Code Section 303(i)(1). Id. at *6. According to the court, the fee award "serves to discourage the filing of involuntary bankruptcy petitions to force debtors to pay a disputed debt." Id. at *5-6. This case represents creditors' improper use of an involuntary bankruptcy petition. Practically, it also underscores the risks that a creditor faces when a court dismisses its petition....