In re: Navient Solutions LLC

MEMORANDUM OPINION GRANTING ALLEGED DEBTOR’S MOTION TO DISMISS INVOLUNTARY PETITION This involuntary case rests on allegations of discharge violations committed by Navient Solutions, LLC (“Navient” or the “Alleged Debtor”). The Court takes these allegations very seriously. The Court also notes that the Fifth Circuit and the Tenth Circuit, in well-reasoned opinions, have recently ruled that section 523(a)(8)(A)(ii) of the Bankruptcy Code does not apply to exempt from discharge certain private student loans. See Crocker v. Navient Sols., LLC (In re Crocker), 941 F.3d 206 (5th Cir. 2019); McDaniel v. Navient Sols., LLC (In re McDaniel), 973 F.3d 1083 (10th Cir. 2020). While there is no controlling law on this point in this Circuit, a direct appeal is currently pending before the Second Circuit on the issue. See Homaidan v. Sallie Mae, Inc. (In re Homaidan), No. 20-1981 (2d Cir. June 24, 2020). No federal court of appeals has ruled in a precedential decision contrary to the Fifth and Tenth Circuits.¹ However, while the applicability of section 523(a)(8)(A)(ii) is a major issue with respect to the petitioning creditors’ alleged claims and in the related pending suits, it is not the only disputed issue. Numerous suits remain pending in many courts around the country, including several cases against Navient that involve counsel to the petitioning creditors, regarding the same or similar allegations that are asserted in the involuntary petition, the supplemental statement thereto, and the joinder, with many unresolved issues. While the allegations of discharge violations are troubling, the Court also takes very seriously the filing of an involuntary petition and finds that the petition and the joinder are profoundly lacking. This is particularly due to the lack of any documentation supporting any of the claims, as well as the failure of counsel to the petitioning creditors to file any response to the motion to dismiss, or even to attend the hearing on the motion. In addition, there has been no showing that the Alleged Debtor is generally not paying its debts as they become due. Significantly, the Alleged Debtor is owned by Navient Corp., a publicly traded corporation with a market capitalization as of March 5, 2021 of $2.367 billion. And despite the number of lawsuits pending against Navient asserting violations of discharge injunctions, its counsel stated during the Hearing that there are no unsatisfied judgments against Navient, a statement that has not been contradicted by the petitioning creditors’ counsel. Rather, this involuntary case is a transparent effort by the petitioning creditors’ counsel to bypass litigating the numerous cases against Navient that raise allegations of violations by Navient of discharge injunctions. Entry of an order of relief against Navient in this involuntary case would mean that all lawsuits seeking damages against Navient would be subject to the automatic stay under section 362. The Court also finds that abstention is warranted so that the important disputed issues may be resolved in the cases in which they were properly raised. Accordingly, after a hearing held by the Court on February 25, 2021, the Court issued an order dismissing the involuntary petition. (ECF Doc. # 42.) This opinion elaborates on the findings of fact and conclusions of law supporting the Court’s order and dismissal of the involuntary case.² I. FINDINGS OF FACT On February 8, 2021, Austin C. Smith, Esq. (“Smith”) filed an involuntary petition against Navient Solutions, LLC, on behalf of Sarah Bannister (“Bannister”), Brandon Hood (“Hood”), and Labarron Tate (“Tate,” and with Bannister and Hood, the “Petitioning Creditors”). (“Involuntary Petition,” ECF Doc. # 1.) An amended involuntary petition was filed on February 10, 2021. (“Amended Petition,” ECF Doc. # 2.) Attached to the Amended Petition is the Amended Statement on Involuntary Petition against Navient Solutions LLC. (“Supplement,” ECF Doc. # 2-1.) On February 17, 2021, Navient filed a motion to dismiss the involuntary petition. (“Motion,” ECF Doc. # 14.) In support of the Motion, Navient filed two declarations of its counsel, Stephen E. Hessler. (“First Hessler Decl.,” ECF Doc. # 16; “Second Hessler Decl.,” ECF Doc. # 29.) On February 23, 2021, Public Interest Capital, LLC (“PICAP”), filed a joinder in the involuntary petition in this case. (“PICAP Joinder,” ECF Doc. # 35.) On February 25, 2021, the Court held a hearing (the “Hearing”), during which it heard arguments from counsel for Navient and PICAP. Notably, Smith did not file an opposition to the Motion, and he did not attend the Hearing. Smith’s lack of attendance followed his repeated requests for extensions to file a response to the Motion and other accommodations. Two such requests were granted, but further requests were denied.³ Neither the Petitioning Creditors nor PICAP filed a response addressing the arguments for dismissal contained in the Motion. A. The Petitioning Creditors The Amended Petition states that the three Petitioning Creditors assert claims against Navient totaling $45,683.64; each claim seeks a “[r]efund of overpayment.” (Amended Petition at 3.) The Petitioning Creditors only make vague assertions that their claims reflect “money wrongfully collected from them after discharge.” (Supplement at 9.) The Petitioning Creditors submitted no supporting documentation to the Court regarding their claims. 1. Bannister Bannister asserts a claim of $6,097.37. (Amended Petition at 3.) Bannister holds five Tuition Answer Loans serviced by Navient for her daughter’s education, originated between 2005 and 2007.⁴ (Motion 11; First Hessler Decl. Exs. I-1 to I-5.) Bannister also held two Career Training Loans, also for her daughter’s education, originated in 2006 and 2008. (Motion 11; First Hessler Decl. Exs. J-1, J-2.) On November 18, 2009, Bannister filed a petition for relief under chapter 7 of the Bankruptcy Code in the Southern District of New York. (Case No. 09-16875 (JLG).) Bannister received a discharge on May 26, 2010. (Id., ECF Doc. # 12.) Bannister’s bankruptcy case was closed on July 12, 2010. On May 10, 2012, Bannister moved to reopen her bankruptcy case. (Id., ECF Doc. # 13.) The request to reopen the case was granted on May 22, 2012. (Id., ECF Doc. # 14.) On December 12, 2015, Bannister filed an adversary proceeding against Navient, among others, arguing that the loans with Navient are dischargeable under section 523(a)(8). (Adv. Proc. 15-01418, ECF Doc. #1.) On May 31, 2017, the court entered an order approving a stipulation of settlement between Bannister and Navient (the “Stipulation” or the “Bannister Stipulation,” id., ECF Doc. # 22-1), and dismissing Navient from the adversary proceeding. (Id., ECF Doc. # 23.) In July 2020, Bannister filed a motion to vacate the Stipulation on the grounds that the Stipulation did not meet the requirements of section 524(c) and that the loans referenced in the Stipulation were dischargeable. (Id., ECF Doc. ## 99, 101.) On January 20, 2021, Judge Garrity issued a memorandum decision and order denying the motion to vacate the Stipulation. (“Denial Order,” id., ECF Doc. # 121.) In the Denial Order, Judge Garrity found that the Stipulation did not need to meet the requirements of section 524(c), as that section applies only to dischargeable debts, while “the Debtor stipulated that the Navient Debt is excepted from discharge under section 523(a)(8), and the Court approved the Stipulation for Settlement. The stipulation resolves the issue of the dischargeability of the Navient Debt.” (Id. at 13.) The Denial Order has not been appealed, and the time to do so has expired. See FED. R. BANKR. P. 8002(a) (“[A] notice of appeal must be filed with the bankruptcy clerk within 14 days after entry of the judgment, order, or decree being appealed.”). The Stipulation only related to five out of the seven loans held by Bannister, and it is not clear to which loans Bannister’s claim for a refund of overpayment relate. (See Stipulation at 2 (listing the five loans that are the subject of the Stipulation); Motion 11 (noting that, in addition to the five Tuition Answer Loans addressed in the Stipulation, “Bannister also held two Career Training Loans”).) On July 28, 2020, Bannister filed a petition for relief under chapter 13 of the Bankruptcy Code, again in the Southern District of New York. (Case No. 20-11718 (CGM).)⁵ On January 19, 2021, Bannister commenced an adversary proceeding against Navient, among others, in an action which Bannister describes as “aris[ing] out of an adversary proceeding that was being heard as part of Bannister’s 2009 chapter 7 before the Honorable James Garrity.” (Adv. Proc. 21-01003 (CGM), ECF Doc. # 1, 5.) By this most recent adversary proceeding, Bannister again seeks a determination of dischargeability. (Id. 17.) No rulings have been issued yet in this adversary proceeding. 2. Hood Hood asserts a claim of $28,919.37. (Amended Petition at 3.) Hood holds five Signature Student Loans, originated between 2000 and 2003, that have been consolidated and are now serviced by Navient. (Motion 13; First Hessler Decl. Exs. M-1 to M-6.) Hood also held one Career Training Loan that originated in 2008. (Motion 13; First Hessler Decl. Ex. N.) On June 16, 2011, Hood filed a petition for relief under chapter 7 of the Bankruptcy Code in the District of Massachusetts. (Motion 12; Case No. 11-15781 (WCH).) Hood was granted a discharge on October 4, 2011. (Motion 12; First Hessler Decl. Ex. L.) Hood did not file an adversary proceeding to contest the dischargeability of any educational debt with Navient or its affiliates. (Motion 12.) 3. Tate Tate asserts a claim of $10,666.90. (Amended Petition at 3.) Tate holds one loan serviced by Navient, originated in 2002. (Motion 14; First Hessler Decl. Ex. P.) On June 30, 2004, Tate filed a petition for relief under chapter 13 of the Bankruptcy Code in the Northern District of Georgia. (Motion 14; Case No. 04-11990 (WHD).) Tate’s chapter 13 case was converted to one under chapter 7 on March 27, 2006. (Motion 14.) Tate was granted a discharge on July 7, 2006. (Id.; First Hessler Decl. Ex. O.) Tate did not file an adversary proceeding to contest the dischargeability of any educational debt with Navient or its affiliates. (Motion 14.) B. PICAP PICAP asserts that it, in its individual capacity, holds an unsecured claim against the Alleged Debtor that is noncontingent, liquidated, and not subject to a bona fide dispute as to liability, (a) in the amount of not less than $37,000, representing the amount that the Alleged Debtor wrongfully and illegally collected from PICAP’s predecessor-ininterest after the bankruptcy discharge of PICAP’s predecessor-ininterest and (b) in the amount of not less than $300,000, representing an approximate amount of legal fees and litigation expenses incurred by PICAP’s predecessor-in-interest in connection with its successful litigation against the Alleged Debtor, culminating in the Federal McDaniel-Liability Ruling issued against the Alleged Debtor. (PICAP Joinder 1.) At the Hearing, counsel to PICAP indicated that PICAP’s “predecessor-ininterest” was one of the plaintiffs in McDaniel, 973 F.3d 1083. (Hearing at 1:05:55-1:06:51.) PICAP also asserts that it, in its capacity as a proposed creditor-class claim representative, on behalf of all similarly situated persons or entities, holds an unsecured, creditor-class claim against the Alleged Debtor that is noncontingent, liquidated, and not subject to a bona fide dispute as to liability, in the anticipated amount of several billion dollars, representing sums that the Alleged Debtor (a) wrongfully and illegally collected from the creditor-class after the bankruptcy discharge of the creditor-class and (b) additionally owes the creditor-class arising from the Alleged Debtor’s violations of, inter alia, federal and state consumer protection statutes involving the creditor-class. (PICAP Joinder 2.) Counsel to PICAP confirmed at the Hearing that PICAP has not been certified as class representative in any pending litigation. (Hearing at 1:16:01-1:16:08.) PICAP has not provided the Court with any authority that supports PICAP’s ability to assert a claim “as a proposed creditor-class claim representative” on behalf of an unnamed, uncertified class. Like the Petitioning Creditors, PICAP has not provided the Court with any documentation to support any of its claims. C. Other Ongoing Litigation Several putative class actions are currently pending against Navient, alleging that Navient has collected on private student loans that were discharged in the borrowers’ bankruptcy proceedings. These include Crocker v. Navient Solutions, LLC, Adv. Proc. No. 16-03175 (DRJ) (Bankr. S.D. Tex. 2016), Homaidan v. Sallie Mae, Inc., Adv. Proc. No. 17-01085 (ESS) (Bankr. E.D.N.Y. June 23, 2017), Bolt v. Navient Solutions, Adv Proc. No. 20-03040 (AMN) (Bankr. D. Conn. Sept. 8, 2020), Mazloom v. Navient Solutions, Inc., Adv. Proc. No. 20-80033 (DD) (Bankr. N.D.N.Y. July 2, 2020), and Teran v. Navient Solutions, LLC, Adv. Proc. No. 20-03075 (DM) (Bankr. N.D. Cal. Aug. 31, 2020) (collectively, the “Discharge Litigation”). (Motion 15.) None of these cases have been certified as class actions.⁶ McDaniel v. Navient Solutions, LLC, Adv. Proc. No. 17-01274 (KHT) (Bankr. D. Colo. July 12, 2017) (and the appellate decision in McDaniel, 973 F.3d 1083, referenced above), involves many of the same issues as the Discharge Litigation, but only involves two individual plaintiffs (Byron and Laura McDaniel) and is not a class action. II. DISCUSSION A. Whether the Claims are Contingent or the Subject of a Bona Fide Dispute Section 303(b)(1) of the Bankruptcy Code provides, in pertinent part: An involuntary case…is commenced by the filing with the bankruptcy court of a petition…(1) by three or more entities, each of which is…a holder of a claim…that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount…. 11 U.S.C. §303(b)(1) (emphasis added).⁷ “A creditor must satisfy both prongs of this test: the claim must not be subject to a bona fide dispute as to either liability or a dispute as to amount.” In re TPG Troy, LLC, 492 B.R. 150, 159 (Bankr. S.D.N.Y. 2013). The Second Circuit in Crest One SpA v. TPG Troy, LLC (In re TPG Troy, LLC), 793 F.3d 228 (2d Cir. 2015), affirmed the bankruptcy court decision in TPG Troy, LLC, and held that courts must apply an objective standard to determine whether a bona fide dispute exists. The court stated: A court must determine whether there is an objective basis for either a factual or a legal dispute as to the validity of the debt. There is a bona fide dispute if there is either a genuine issue of material fact that bears upon the debtor’s liability or a meritorious contention as to the application of law to undisputed facts…. The petitioning creditor bears the initial burden of coming forward with evidence to establish a prima facie case that no bona fide dispute exists. Once a prima facie case has been established, the burden shifts to the debtor to demonstrate the existence of a bona fide dispute. Id. at 234 (internal quotation marks and citations omitted). Once the bankruptcy court determines that there is a bona fide dispute, it is not the proper forum to resolve it. See id. (“An involuntary bankruptcy case cannot be the means of pressuring a debtor to pay a legitimately disputed debt…. Critically, while a court is called upon to determine the presence of a bona fide dispute, it is not called on to resolve such dispute.”). 1. The Petitioning Creditors and PICAP Have Failed to Meet Their Burden Far from meeting their burden to “com[e] forward with evidence to establish a prima facie case that no bona fide dispute exists,” id. (internal quotation marks omitted), the Petitioning Creditors and PICAP have provided no evidence of their claims. Accordingly, the involuntary petition should be dismissed on that basis alone. Nevertheless, the Court proceeds to analyze, in the alternative, whether the Alleged Debtor has carried its burden “to demonstrate the existence of a bona fide dispute.” Id. 2. Crocker and McDaniel In support of their arguments that the debts are dischargeable and the claims are not subject to bona fide dispute, the Petitioning Creditors and PICAP rely on Crocker, 941 F.3d 206, and McDaniel, 973 F.3d 1083. Both cases address the scope of section 523(a)(8)(A)(ii) with respect to private student loans. Section 523(a)(8)(A)(ii) provides that debt that is “an obligation to repay funds received as an educational benefit, scholarship, or stipend” is not discharged, “unless excepting such debt from discharge…would impose an undue hardship on the debtor and the debtor’s dependents.” 11 U.S.C. §523(a)(8)(A)(ii). The Fifth Circuit in Crocker held that the term “educational benefit” under section 523(a)(8)(A)(ii) “is limited to conditional payments with similarities to scholarships and stipends.” Crocker, 941 F.3d at 224. The Tenth Circuit in McDaniel agreed with Crocker and found “that, read correctly, the language ‘an obligation to repay funds received as an educational benefit’ signifies a conditional grant of funding for education — akin to a stipend and scholarship — as opposed to a loan of funds for education.” McDaniel, 973 F.3d at 1098. Both cases were remanded to the respective bankruptcy courts. See Crocker, 941 F.3d at 224; McDaniel, 973 F.3d at 1105. At the Hearing, counsel for Navient represented that no money judgment has been rendered against Navient in either case. (Hearing at 29:28-29:51.) The Petitioning Creditors’ bankruptcy cases did not occur in the Fifth or Tenth Circuits, and, therefore, McDaniel and Crocker arguably have no effect on their claims. In addition, the issue of the applicability of section 523(a)(8)(A)(ii) to private student loans was recently certified for direct appeal to the Second Circuit, as “there is no controlling case from the Supreme Court or the Second Circuit on that issue.” Homaidan v. Sallie Mae, Inc. (In re Homaidan), 2020 WL 5668972, at *2 (E.D.N.Y. Feb. 25, 2020); Homaidan v. Sallie Mae, Inc. (In re Homaidan), No. 20-1981 (2d Cir. June 24, 2020). The certification of the question to the Second Circuit very strongly suggests that the dispute over the applicability of section 523(a)(8)(A)(ii) is bona fide, particularly with respect to the Bannister claim, as Bannister was issued a discharge in her bankruptcy case within the Second Circuit (and Bannister’s reopened chapter 7 and new chapter 13 case currently continue within the Second Circuit). As noted above, PICAP asserts that it holds the claim of one of the plaintiffs in McDaniel. (Hearing at 1:05:55-1:06:51.) Nevertheless, even with respect to the McDaniel claim — and even if PICAP were able to assert the claims of the putative class, and even if every circuit were to agree with Crocker and McDaniel such that the applicability of section 523(a)(8)(A)(ii) would not be in dispute with respect to the Petitioning Creditors as well — Navient asserts that many unresolved issues remain. These issues include whether a debtor is automatically entitled to a discharge of the debts in question or whether it must initiate an adversary proceeding, whether there was a co-borrower on the loans at issue (and if so, whether the debtor rather than the co-borrower made any payments post-discharge), whether Navient’s collection efforts actually violated the discharge injunction, whether the loans were obtained under false pretenses (and if so, whether the debtor is barred from receiving a discharge of the loans), whether the claims are barred by the doctrine of laches, and the amount of any alleged overpayment. (Id. at 25:59-27:08.) These issues are currently being litigated in the McDaniel case and in other actions, including putative class actions, against Navient, where they should properly be resolved. While “the mere existence of pending litigation…or the filing of an answer is insufficient to establish the existence of a bona fide dispute,…’pending litigation over a claim strongly suggests’ the existence of a bona fide dispute, even if it does not suffice to firmly establish that existence.” TPG Troy, 793 F.3d at 234 (quoting TPG Troy, 492 B.R. at 159-60). Here, as in TPG Troy, “[t]he plethora of ongoing litigation that involves the same nucleus of facts speaks strongly to the likelihood that there is a bona fide dispute in this case.” 492 B.R. at 160. 3. The Bannister Stipulation and the Denial Order The Bannister Stipulation and the Denial Order raise issues of preclusion. “[S]ettlements ordinarily occasion no issue preclusion (sometimes called collateral estoppel), unless it is clear…that the parties intend their agreement to have such an effect.” Arizona v. California, 530 U.S. 392, 414 (2000). While “[i]t is clear that a dismissal, with prejudice, arising out of a settlement agreement operates as a final judgment for res judicata purposes,” Marvel Characters v. Simon, 310 F.3d 280, 287 (2d Cir. 2002), the effect of a dismissal without prejudice is less clear. Here, the dismissal order did not indicate that it was with prejudice, and it is not entirely clear that the parties intended the Stipulation to have collateral estoppel effect. Accordingly, the Stipulation may not have preclusive effect. Nevertheless, the issue of whether the loans were dischargeable pursuant to the Stipulation was actually litigated and determined, and the court’s finding on this issue was essential to its finding that section 524 does not apply and that the Stipulation is enforceable. Accordingly, the court’s finding that the loans were not dischargeable pursuant to the Stipulation has collateral estoppel effect. See Arizona v. California, 530 U.S. at 414. (“It is the general rule that issue preclusion attaches only ‘[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment.’” (quoting Restatement (Second) of Judgments §27, p. 250 (1982))). Moreover, under res judicata, “a final judgment on the merits bars further claims by parties or their privies based on the same cause of action.” Brown v. Felsen, 442 U.S. 127, 131 (1979). Accordingly, the Denial Order precludes the claim of dischargeability with respect to the loans at issue in the Stipulation. However, as noted above, the Stipulation only related to five loans out of the seven that apparently exist between Bannister and Navient, and it is not clear to which loans Bannister’s claim for a refund of overpayment relate. (See Stipulation at 2 (listing the five loans that are the subject of the Stipulation); Motion 11 (noting that, in addition to the five Tuition Answer Loans addressed in the Stipulation, “Bannister also held two Career Training Loans”).) Therefore, only to the extent that Bannister’s claim for a refund of overpayment relates to the loans at issue in the Stipulation, the claim is not only subject to bona fide dispute as to liability and amount, but it appears that Bannister is precluded entirely from asserting a claim premised on the dischargeability of those loans. 4. Conclusion In light of (i) the complete failure by the Petitioning Creditors and PICAP to provide evidence showing that the claims are not subject to bona fide dispute, (ii) the multitude of issues that remain unresolved between the Petitioning Creditors, PICAP, and Navient (whether in the various ongoing litigations or otherwise), and (iii) the Bannister Stipulation (to the extent that Bannister’s purported claim relates to the loans at issue in the Stipulation), the Court FINDS that the claims of the Petitioning Creditors and PICAP are subject to a bona fide dispute both as to liability and amount. Accordingly, the requirements of section 303(b) are NOT MET. B. Whether the Petitioning Creditors Filed the Involuntary Petition in Bad Faith Navient argues that the Court should dismiss this involuntary case because the Petitioning Creditors have filed the involuntary petition in bad faith. (Motion

32-40.) While the Bankruptcy Code does not define “bad faith,” courts have developed a requirement that an involuntary petition be filed in good faith, and courts use various tests to determine whether creditors have filed an involuntary petition in bad faith. See 2 COLLIER ON BANKRUPTCY 303.16 (16th ed. 2021) (listing tests, including the improper purpose test, the improper use test, the objective test, and the Rule 9011 test). Navient submits that “[c]ourts in the Second Circuit have applied the improper purpose test, which focuses on ‘whether the filing of the petition was motivated by ill will, malice, or a desire to embarrass or harass the alleged debtor.’” (Motion 33 (quoting Lubow Mach. Co. v. Bayshore Wire Prods. (In re Bayshore Wire Prods.), 209 F.3d 100, 105 (2d Cir. 2000).) Contrary to Navient’s reading of Bayshore, however, rather than selecting a test, the Bayshore court concluded “that it did not need to choose among these approaches [to analyzing bad faith]” because the petition was filed in bad faith regardless of which test it applied. Bayshore, 209 F.3d at 106. While the Second Circuit disagreed with the bankruptcy court’s ultimate conclusion on the issue of bad faith, it too declined to choose a particular test, “ conclud[ing] that there [was] no basis for a finding of bad faith under any of the tests currently in usage.” Id. Thus, it is instructive to briefly consider at least each of the four tests discussed by the Second Circuit in Bayshore. The improper use test looks to whether “a petitioning creditor uses involuntary bankruptcy procedures in an attempt to obtain a ‘disproportionate advantage’ for itself, rather than to protect against other creditors obtaining disproportionate advantages, particularly when the petitioner could have advanced its own interests in a different forum.” Id. at 105 (quoting In re K.P. Enter., 135 B.R. 174, 179 n.14 (Bankr. D. Me. 1992)); see also 2 COLLIER ON BANKRUPTCY 303.16[1] (The “‘improper use’ test…looks at whether the creditor’s conduct takes disproportionate advantage of other creditors” (e.g., “treating the bankruptcy process as if it were the creditor’s own private collection agency”).). Under the improper use test, the involuntary petition appears to have been filed in bad faith. Not only could the Petitioning Creditors have advanced their interests in a different forum, but they have also already engaged in active litigation against Navient in other forums, litigation that remained ongoing at the time of filing this case. Smith, until recently, was participating in the Crocker case, and Bannister currently has two adversary proceedings pending against Navient in this District.⁸ Bannister is represented by Smith in both adversary proceedings. Moreover, the Petitioning Creditors sought to thrust Navient into bankruptcy, which would have stayed other pending litigation against Navient, potentially to the advantage of the Petitioning Creditors and, in particular, Smith, at the expense of those other parties pursuing remedies against Navient in other pending court cases. The improper purpose test, which Navient cites, finds bad faith “if the filing of the petition was motivated by ill will, malice, or a desire to embarrass or harass the alleged debtor.” Bayshore, 209 F.3d at 105; see also 2 COLLIER ON BANKRUPTCY 303.16[1] (noting that the improper purpose test “is similar to the subjective test and assesses why the creditor sought to file the involuntary case in the first instance”). Under this test too, it seems that the Petitioning Creditors commenced this case in bad faith. This is perhaps a closer question, as it may be unfair to impute Smith’s own animosity for Navient to the Petitioning Creditors. But Smith has made his position clear: he harbors significant ill will with respect to Navient, which he refers to as an embezzler, as running a Ponzi scheme, and as a looter. (Supplement at 4-7.) The objective test looks at whether a reasonable person in the creditor’s position would have believed it reasonable to file an involuntary petition. See Bayshore, 209 F.3d at 105-06; 2 COLLIER ON BANKRUPTCY 303.16[1]. Finally, “a number of courts have sought to model the bad faith inquiry on the standards set forth in Bankruptcy Rule 9011,” which contains both objective and subjective elements. Bayshore, 209 F.3d at 106 (“An analysis under Rule 9011 inquires into a ‘a significant objective requirement bearing on the legal justification of a claim or defense: a reasonable inquiry into the facts and the law.’ In addition to requiring an objective inquiry, Rule 9011 requires a subjective inquiry as well: the bankruptcy proceeding cannot have been interposed for an improper purpose, ‘such as to harass, to cause delay, or to increase the cost of litigation.’”) (quoting General Trading Inc. v. Yale Materials Handling Corp., 119 F.3d 1485, 1501 (11th Cir. 1997).) Again, and for reasons discussed below, whether under the objective test or the 9011 test, the Court finds that this Involuntary Petition was filed in bad faith. In addition to the tests for bad faith outlined in Bayshore, Navient identifies specific factors that a court in this District applied, in In re Murray, 565 B.R. 527 (Bankr. S.D.N.Y. 2019), aff’d, 900 F.3d 53 (2d Cir. 2018), to determine whether an involuntary petition was filed in bad faith. (Motion 32 n.17). In Murray, the court considered the following factors: (1) the existence of a long-standing two party dispute outside of the bankruptcy; (2) whether the petition was filed solely as a judgment enforcement mechanism; (3) whether there are other creditors competing to collect on claims; (4) the existence of adequate remedies under nonbankruptcy law; (5) whether the petitioning creditor is seeking a benefit unavailable outside of bankruptcy; (6) whether the debtors’ assets would be lost or dissipated outside of bankruptcy; and (7) whether the debtor needs or wants a discharge. (Id. (citing Murray, 565 B.R. at 533).) Navient submits that “[c]ourts have consistently found that it is bad faith to file a bankruptcy to ‘delay, forum shop, or obtain a tactical advantage regarding litigation ongoing in [a] nonbankruptcy form.’” (Id. 34 (alteration in original) (quoting In re Silberkraus, 253 B.R. 890, 905 (Bankr. C.D. Cal. 2000)).) Navient also submits that “filing a bankruptcy ‘for the purpose of exerting pressure on an opponent in pending litigation is evidence of bad faith.’” (Id. (quoting In re Forever Green Athletic Fields, Inc., 500 B.R. 413, 427 (Bankr. E.D. Pa. 2013)).) Navient advances two specific arguments as to why Petitioning Creditors have filed the involuntary petition in bad faith. First, Navient argues that the involuntary petition is an attempt to influence other litigation involving Navient and the Petitioning Creditors, particularly ongoing proceedings in Crocker and McDaniel. (Motion