(Reuters) – A New York bankruptcy judge on Thursday threw out an involuntary bankruptcy case filed against Navient Corp.’s student loan servicing unit.
At the conclusion of a remote hearing, U.S. Bankruptcy Judge Martin Glenn in Manhattan said he would dismiss the case against Navient Solutions LLC, which is represented by Kirkland & Ellis and McGuireWoods, because the claims brought by the three student loan borrowers who filed the petition are in dispute. The borrowers filed their involuntary Chapter 11 case on Feb. 8 saying they are owed a combined $45,683.64 in “overpayments” they say the servicer illegally collected.
Navient moved to dismiss the case last week, saying it was not filed for legitimate purposes under bankruptcy law and that the borrowers failed to allege that the company was not paying its debts in a timely manner. The company also accused the borrowers’ attorney, who represents student loan borrowers in other litigation against Navient, of pursuing “a long-running, highly public crusade against Navient and the broader student loan servicing industry.”
The borrowers’ lawyer, Austin Smith of Smith Law Group, did not appear for the Thursday hearing and did not immediately respond to a request for comment. Glenn said at the outset of the hearing that Smith had informed the court on Wednesday that he was experiencing a medical emergency. Smith has previously denied the company’s allegations.