Tracking with a recent decision in Colorado, the U.S. Bankruptcy Court for the District of Arizona recently held that the debtor’s operation of a business that is illegal under federal law mandates dismissal of an involuntary bankruptcy petition filed against the debtor, the National Law Review reported yesterday. Medpoint Management managed the operations of Arizona Nature’s Wellness (ANW), which held an Arizona Department of Health Services-issued Dispensary Certificate allowing it to operate a branded medical marijuana dispensary under the Arizona Medical Marijuana Act. In its capacity as manager, Medpoint owned ANW’s name and trademark under which ANW sold its marijuana products. When several of its creditors filed an involuntary bankruptcy petition against it Medpoint filed a motion to dismiss the petition. In the context of the motion to dismiss, the court analyzed the issue as “whether [the court] can or should enter an involuntary order for relief against Medpoint despite the fact that Medpoint’s current and former business affairs are illegal under applicable federal criminal statutes.”
