automatic stay

Fifth Circuit Opinion Upholds Limits on Actions Between Non-Debtors


 In a case involving multiple parties and proceedings, the Fifth Circuit has affirmed lower court rulings which prohibited one non-debtor from suing a second non-debtor and awarded sanctions against a party that told a state court to disregard the Bankruptcy Court's orders. In the Matter of PFO Global, Incorporated, Case No. 20-10885 (5th Cir. 2/9/22), which can be found here.


Exaggerated Allegations Lead to Sanctions in Stay Violation Case


Many consumer debtor attorneys have chosen to enhance their revenue by filing suit on relatively minor violations of the automatic stay or discharge. There is nothing inherently wrong with these suits since they vindicate the rights that debtors receive when they file bankruptcy. However, some practitioners have resorted to filing form complaints which go on for hundreds of paragraphs with boilerplate allegations about the callousness of the particular creditor.


11th Circuit – Creditor Cannot Pursue Pre-Petition Fraudulent Transfer Claims Against Debtor for Non-Dischargeable Debt; Establishes Standard of Review for In re Jet Florida.


In SuVicMon Development, Inc. v. Morrison, __ F.3d __, 2021 WL 1136546 (11th Cir. March 25, 2021) (click here for .pdf), the plaintiffs are three corporations that sued the Debtor for fraud and securities violations in state court.


Supreme Court Rules That Passive Retention Does Not Violate Stay


 The Supreme Court decided that a creditor which passively retains possession of estate property does not "exercise control" over such property in violation of 11 U.S.C. Sec. 362(a)(3). The Court viewed the word "exercise" to require active measures.  Case No. 19-357, Chicago v. Fulton (1/14/21), which can be found here.


Supreme Court Set to Hear Passive Stay Violation Case

Seeking to resolve a 5-3 split among the Courts of Appeals, the Supreme Court will consider whether a creditor which passively retains property of the estate violates the automatic stay.  Case No. 19-357, City of Chicago v. Fulton. The Second, Seventh, Eighth, Ninth and Eleventh Circuits have ruled that retaining possession or control of property of the debtor violates the stay. The Third, Tenth and D.C.

Yes You Can Refile Your Chapter 13 Case, But Should You?

09/06/17 300w" sizes="(max-width: 348px) 100vw, 348px" />If you are facing a foreclosure, vehicle repossession, wage garnishment or other financial crisis, Chapter 13 bankruptcy can


Money Center of America – Motion to Intervene Granted


In a 16 page opinion released January 28, 2016 in the Casino Caribbean, et al. v. Money Centers of America adversary proceeding (Bank. D. Del. Adv. No. 14-50437), Judge Christopher S. Sontchi of the Delaware Bankruptcy Court granted the motion of Quapaw Casino to intervene in the adversary proceeding.  Judge Sontchi’s opinion is available here (the “Opinion”).


Seeking Relief from the Automatic Stay – Personal Injury Claimants


Very often in the course of a bankruptcy proceeding, a creditor with a pending lawsuit against the debtor will need to obtain relief from the automatic stay in order to continue to prosecute the pre-petition litigation.   For example, personal injury claimants who seek to recover solely against an insurance policy of a debtor may obtain relief from the automatic stay in certain circumstances.  Such claimants will need to file a motion with the Delaware Bankruptcy Court to obtain relief from the stay in order to pursue their claim to a final judgment.


Trump Entertainment – Automatic Stay v. Norris-LaGuardia Act


In a 23 page opinion released July 21, 2015 in the Trump Entertainment Resorts case (Bank. D. Del. 14-12103), Judge Kevin Gross of the Delaware Bankruptcy Court opined upon the interaction of the Bankruptcy Code’s automatic stay and the Norris-LaGuardia Act (“NLA”).  Judge Gross’ opinion is available here (the “Opinion”).