Does Retention of Property Violate the Automatic Stay in Bankruptcy? The Supreme Court Weighs In

From Krieg DeVault LLP:

On January 14, 2021, the Supreme Court of the United States resolved a circuit split by unanimously holding that the “mere retention of property” by a creditor after the time a debtor files its bankruptcy petition does not violate the automatic stay under § 362(a)(3) of the United States Bankruptcy Code, 11 U.S.C. §§ 101, et seq. (Bankruptcy Code.) In City of Chicago v. Fulton, the City of Chicago (City) impounded individuals’ vehicles for failure to pay vehicular fines, and when those individuals subsequently filed for relief under chapter 13 of the Bankruptcy Code, the City refused to return the vehicles. The debtors argued, and the United States Bankruptcy Court for the Northern District of Illinois and Seventh Circuit Court of Appeals agreed, that the City’s retention of the vehicles violated § 362(a)(3), which operates as a stay of any act “to exercise control over property” of the estate. Read more.

This article was submitted by Kay Dee Baird, Krieg DeVault LLP. If you would like to submit content or write an article for the Commercial & Bankruptcy Law Section, please email Kara Sikorski at ksikorski@indybar.org.