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Lessors who repossess property immediately prior to a lessee bankruptcy filing may be required to return such property or face sanctions by the bankruptcy court. Federal courts are currently split on the issue of whether the lessor must voluntary surrender property seized pre-petition or may hold such property until such time as the debtor seeks, and obtains, an order of turnover.
Lessors who repossess property immediately prior to a lessee bankruptcy filing may be required to return such property or face sanctions by the bankruptcy court. Federal courts are currently split on the issue of whether the lessor must voluntary surrender property seized pre-petition or may hold such property until such time as the debtor seeks, and obtains, an order of turnover. In June, the U.S. Court of Appeals for the Seventh Circuit weighed in and decided four appeals involving Chapter 13 debtor filings following the City of Chicago’s seizure of vehicles based on unpaid fines. See, In re Fulton, 2019 U.S. App. LEXIS 18393 (7th Cir. 2019). In Fulton, the Seventh Circuit ruled that the City of Chicago must comply with the automatic stay by returning impounded cars immediately after being notified of a Chapter 13 filing. (The Fulton decision is not the first time the Seventh Circuit decided the issues presented. In 2009, the court held that a creditor must comply with the automatic stay and return a debtor’s vehicle upon her filing of a bankruptcy petition. See, Thompson v. General Motors Acceptance Corp., 566 F.3d 699 (7th Cir. 2009).)
By Michael L. Cook
The Third Circuit recently took a “pragmatic approach” when affirming lower court orders denying a stay of bankruptcy settlement distributions pending appeal. After holding that the district court’s “stay denial order” was “final” for jurisdictional purposes, it also confirmed “the applicable standard of review” on motions for stays pending appeals.
By Rudolph J. Di Massa Jr. and Drew S. McGehrin
The U.S. Court of Appeals for the Fourth Circuit recently held that a debt incurred as a result of a willful and malicious injury may nevertheless be dischargeable notwithstanding the provisions of 11 U.S.C. Section 523(a)(6).
By Daniel A. Lowenthal
A Tension Between §§363(f) and 365(h)
How do bankruptcy judges resolve the competing desires of buyers and tenants? Must buyers bid for property knowing that tenants might have the right to stay if their leases are rejected? Are tenants in jeopardy that they might have to move elsewhere to live or work?
By Francis J. Lawall and Marcy J. McLaughlin
The Office of U.S. Trustee is known among practitioners as the “watchdog” of the bankruptcy process. To fund the U.S. Trustee, Chapter 11 debtors must pay quarterly fees. Following a recent substantial increase to the U.S. Trustee fee schedule, the U.S. Bankruptcy Court for the Eastern District of Virginia found the amended fee schedule to be unconstitutional because it was being applied nonuniformly to Chapter 11 debtors around the country.