Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or perform any legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.
In re Graham
Oregon Bankruptcy Court Case No. 07-62339-fra11
10/17/08 UNPUBLISHED
The Two Issues and the Two Holdings
1) Does an order terminating the automatic stay under BAPCPA's § 362(c)(3)(A), terminate the stay as to only property of the debtor or also as to property of the estate? Held: the stay terminates only as to property of the debtor, NOT property of the estate.
2) Is such a termination of the stay limited only to formal actions (judicial, administrative and other such formal actions) taken before the filing of the case, or is the stay terminated more broadly? Held: § 362(c)(3)(A) terminates the automatic stay only with regard to a formal action taken by a party before the filing of the case.
The Statute
Section 362(c)(3) provides in relevant part:
(3) if a single or joint case is filed by or against debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed. . . --
(A) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case; [and]
(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed . . . . [Emphasis added].
The Procedural Context
This personal Chapter 11 case was filed within a month after the debtor's dismissed his Chapter 13 case, which he had dismissed in response to a creditor filing an objection alleging that debtor was not qualified for Chapter 13. In the Chapter 11 case debtor filed a timely motion to extend the stay beyond the initial 30 days, as required by § 362(c)(3)(B) quoted above, which the bankruptcy court denied from the bench, apparently without a written order to that effect. A secured creditor subsequently filed a motion asking for a determination that the stay was terminated not just as to property of the debtor but also property of the estate. This distinction was critical because upon the filing of the Chapter 11 case debtor's property securing the creditor's loans became property of the estate.
Judge Alley's Analysis
1) As to whether the stay had been terminated as to the property of the estate, the judge declined to take the "minority position" that the statute is ambiguous and that other BAPCPA provisions and "the broader context" show that the stay expired entirely. Instead he chose "to adopt the position of the majority of courts . . . which holds that there is no ambiguity in the statute, and that § 362(c)(3)(A) terminates the stay with respect to the debtor and property of the debtor, but not property of the estate."
2) As to the meaning of the termination of the stay "with respect to any action taken," Judge Alley simply followed the "well reasoned" statutory analysis of a North Carolina bankruptcy court (In re Paschal, 337 B.R. 274 (Bankr. E.D.N.C. 2006)) to define "action" in this subsection to mean a “formal action, such as a judicial, administrative, governmental, quasi-judicial, or other essentially formal activity or proceeding.” Furthermore, Pascal held that "action taken" means such formal action taken pre-petition. Thus, the only stay that was terminated was as to formal action taken by the creditor pre-petition. Since the secured creditor did not have any formal action pending pre-petition, the 30-day stay termination did not apply to it or to any future action it were to take. Instead it would have to file a conventional motion for relief from stay under § 362(d).
2) Is such a termination of the stay limited only to formal actions (judicial, administrative and other such formal actions) taken before the filing of the case, or is the stay terminated more broadly? Held: § 362(c)(3)(A) terminates the automatic stay only with regard to a formal action taken by a party before the filing of the case.
The Statute
Section 362(c)(3) provides in relevant part:
(3) if a single or joint case is filed by or against debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed. . . --
(A) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case; [and]
(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed . . . . [Emphasis added].
The Procedural Context
This personal Chapter 11 case was filed within a month after the debtor's dismissed his Chapter 13 case, which he had dismissed in response to a creditor filing an objection alleging that debtor was not qualified for Chapter 13. In the Chapter 11 case debtor filed a timely motion to extend the stay beyond the initial 30 days, as required by § 362(c)(3)(B) quoted above, which the bankruptcy court denied from the bench, apparently without a written order to that effect. A secured creditor subsequently filed a motion asking for a determination that the stay was terminated not just as to property of the debtor but also property of the estate. This distinction was critical because upon the filing of the Chapter 11 case debtor's property securing the creditor's loans became property of the estate.
Judge Alley's Analysis
1) As to whether the stay had been terminated as to the property of the estate, the judge declined to take the "minority position" that the statute is ambiguous and that other BAPCPA provisions and "the broader context" show that the stay expired entirely. Instead he chose "to adopt the position of the majority of courts . . . which holds that there is no ambiguity in the statute, and that § 362(c)(3)(A) terminates the stay with respect to the debtor and property of the debtor, but not property of the estate."
2) As to the meaning of the termination of the stay "with respect to any action taken," Judge Alley simply followed the "well reasoned" statutory analysis of a North Carolina bankruptcy court (In re Paschal, 337 B.R. 274 (Bankr. E.D.N.C. 2006)) to define "action" in this subsection to mean a “formal action, such as a judicial, administrative, governmental, quasi-judicial, or other essentially formal activity or proceeding.” Furthermore, Pascal held that "action taken" means such formal action taken pre-petition. Thus, the only stay that was terminated was as to formal action taken by the creditor pre-petition. Since the secured creditor did not have any formal action pending pre-petition, the 30-day stay termination did not apply to it or to any future action it were to take. Instead it would have to file a conventional motion for relief from stay under § 362(d).
by Andrew Toth-Fejel
Bankruptcy Litigation Support for Attorneys
Andy@BLSforAttorneys.com
Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or provide and legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.
© 2008 Bankruptcy Litigation Support for Attorneys
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