11 U.S.C. § 362

Section 362(a)(1) permits the automatic stay to extend to a nondebtor employee when a finding of liability against the employee may impute vicarious liability to the debtor employer.

Frazier v. Stephnan · filed 2024-11-12(a)(1)

As a finding of liability against Stephnan may result in an imputation of vicarious liability against his employer, it is appropriate that the automatic stay be extended to Stephnan as well.

Section 362 automatically stays proceedings against the debtor but does not extend the stay to nondebtor defendants without a separate injunction under § 105(a).

Lentz v. MDOC · filed 2024-11-22

The same is true here; no preliminary injunction has been issued, and neither this Court nor the bankruptcy court can otherwise “extend” the automatic stay to non-debtor defendants.

Section 362’s automatic stay does not automatically extend to a debtor’s co-defendants; a court may leave an extension request for the bankruptcy court to assess.

Imming v. De La Vega · filed 2024-10-25(a)(1)

The Court believes the issue of whether to extend the automatic stay is best left to the bankruptcy court because it is in a better position to assess the issue.

Section 362(a)(1) automatically stays proceedings against a Chapter 11 debtor, but does not automatically stay claims against the debtor’s co-defendants.

Lagrange v. Eagle, Inc. · filed 2024-11-22(a)(1)

As the Fifth Circuit has long clarified, this stay does not automatically apply to co-defendants of the Chapter 11 debtor: “The stay envisioned is ‘applicable to all entities,’ § 362(a), but only in the sense that it stays all entities proceeding against the debtor. To read the ‘all entities’ language as protecting co- debtors would be inconsistent with the specifically defined scope of the stay ‘against the debtor,’ § 362(a)(1).” Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983).

Section 362’s bankruptcy stay may extend to nondebtor defendants entitled to indemnity from the debtor when a judgment against them would effectively implicate the debtor.

Smith v. Lumio HX, Inc. · filed 2024-10-22

After considering the arguments offered, the Court agrees that a stay of the entire case is appropriate. First, as the lender defendants point out, they have an indemnity agreement with Lumio. (Doc. 100 at 5.) “Faced with such circumstances, federal courts have extended the [bankruptcy] stay’s protections to non-debtors who would be entitled to indemnity from the debtor in the event of a judgment against them.”

Section 362’s automatic stay can extend to nondebtor codefendants when their identity of interests with the debtor means litigation against them will have an immediate adverse economic consequence for the debtor’s estate.

Viahart, LLC v. Creative Kids Online, LLC · filed 2024-07-03(a)(1)

These facts establish an identity of interests between the debtor and the Remaining Defendants sufficient to support an extension of the automatic stay as to them.

Section 362(a)(1) stays civil proceedings against a bankruptcy debtor but generally does not stay claims against a nondebtor codefendant except in unusual circumstances.

Central Valley Ag Cooperative v. Guthmiller · filed 2024-04-25(a)(1)

But the automatic stay does not generally apply to the entire action. See Hoich, 560 F.3d at 789. Rather, it is limited to the debtor and does “not encompass non-bankrupt co-defendants.”

Section 362 stays an action against the debtor but generally does not extend the stay to the debtor’s codefendants.

Gaedeke Holdings VII Ltd v. Stamps Brothers Oil and Gas LLC · filed 2024-04-11

Gaedeke Holdings VII, Ltd.’s action against Stamps Brothers Oil & Gas, LLC in Case No. CIV-19-344-F is therefore stayed pursuant to 11 U.S.C. § 362. While section 362 of Title 11 extends the stay provisions of the Bankruptcy Code to the “debtor,” the rule followed in the Tenth Circuit is that the stay provision does not extend to the debtor’s co-defendants.

Section 362(a) does not extend the automatic stay to nondebtor defendants absent an immediate adverse economic consequence for the debtor’s estate.

Quarrato v. Madison Global LLC · filed 2023-11-02(a)

WHEREAS, by its terms, section 362(a) of the Bankruptcy Code applies only to debtors, property of the debtor, or property of the estate, and does not apply to stay proceedings against non-debtors. ... WHEREAS, Defendants have failed to show that declining to extend the automatic bankruptcy stay to the Individual Defendants would pose an “immediate adverse economic consequence” to the Corporate Defendant’s estate.

Section 362(a)(1) can extend an automatic stay to nondebtor codefendants when claims against them would have an immediate adverse economic impact on the debtor.

Trustees Of The New York City District Council Of Carpenters Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeshi · filed 2023-06-29(a)(1)

Therefore, the stay applies to the remaining named Defendants because Universal and Universal Fixture are wholly owned by Zigo; Universal, Universal Fixture, and Allied are alter egos and/or successors of each other; and “‘adjudication of [the] claim[s] against [Universal, Universal Fixture, and Allied] w[ould] have an immediate adverse economic impact on” Zigo.

Section 362(a) permits the automatic stay to extend to nondebtors when unusual circumstances exist.

LTL Management LLC v. Those Parties Listed on Appendix A to the Complain · filed 2023-04-27(a)

For the reasons set forth above, the Court concludes that “unusual circumstances” are present warranting an extension of the automatic stay to the nondebtor Protected Parties under § 362(a).

In a Chapter 13 case, § 362’s automatic stay cannot be extended to a debtor’s LLCs through § 105(a) because § 1301 limits the scope of a nonparty stay.

Brian R Teclaw · filed 2023-05-09

Because the express terms of § 1301 cabin the scope of a nonparty stay in a Chapter 13 case, this Court cannot use its equitable powers under § 105(a) to extend the automatic stay of § 362 to the debtor’s LLCs.

Extension of the automatic stay to nondebtors requires a supported showing that a judgment against them would have an immediate adverse economic consequence for the debtor’s estate.

Bouton v. State of Missouri · filed 2023-05-16(a)

Second, even if the Court had the authority to extend the automatic bankruptcy stay, the current record lacks sufficient information for the Court to determine whether the “unusual circumstances” warranting such a stay are present here. ... Thus, the Court cannot determine whether a judgment against DeSouza or Summerville would have an “immediate adverse economic consequence” on the Corizon bankruptcy estate, see Ritchie Cap. Mgmt., L.L.C., 653 F.3d at 763, such that an extension of the stay would be warranted.

Section 362(a)(1) automatically stays proceedings against a debtor; staying litigation against a non-debtor requires a bankruptcy court order.

Aron R Thompson and Nicole R Thompson · filed 2023-03-10(a)(1)

The court agrees that the stay under § 362(a)(1) is “automatic” only as to a debtor in bankruptcy. If litigation is to be stayed against a non-debtor, such a stay must be ordered by the bankruptcy court.

Section 362(a) ordinarily does not stay claims against parties who are not debtors.

Sun v. Sushi Fussion Express, Inc. · filed 2022-06-17(a)

Indeed, automatic bankruptcy stays under 11 U.S.C. § 362(a) do not usually apply to non-debtor parties.

Sections 362(a)(1) and (a)(6) do not extend the automatic stay to separate nondebtor corporations affiliated with the debtor.

The Diocese of Rochester - Adversary Proceeding · filed 2022-05-23(a)(1), (a)(6)

The Court holds that sections 362(a)(1) and (a)(6) do not extend the bankruptcy automatic stay to Catholic Corporations.

Section 362 permits extending the automatic stay to guarantors when necessary to protect the debtor’s reorganization.

Wilmington Trust, National Association, As Trustee For The Benefit of the Registered Holders of UBS Commercial Mortgage · filed 2022-06-08

WHEREAS, extending the stay is “necessary to protect the debtor’s reorganization.”

Section 362 generally stays claims against the debtor defendant, but does not extend to a nondebtor defendant absent unusual circumstances.

CX Reinsurance Company Limited v. Liles · filed 2022-02-23

A stay pursuant to Section 362 is generally only applied to the debtor defendant.

Section 362 generally stays proceedings against the debtor defendant; absent unusual circumstances, the stay does not extend to a nondebtor codefendant.

Johnson v. CX Reinsurance Company Limited · filed 2022-02-23

A stay pursuant to Section 362 is generally only applied to the debtor defendant. ... Here, neither CXRe nor National Union has argued that there are “unusual circumstances” or that the stay must also be applied to National Union.

Section 362(a)(1) does not stay actions against nondebtor parties merely because they allegedly participated in a joint venture with the debtor.

Havens Vs. Kurian · filed 2021-12-13(a)(1)

Although appellant has suggested that some of the parties in the underlying district court action (or entities affiliated with such parties) were part of an alleged joint venture with Skybridge, this is insufficient to trigger the automatic stay as to such parties.

Section 362(a)(1) protects the bankruptcy debtor, but does not extend the automatic stay to a nondebtor absent extraordinary circumstances.

J.E. Rupert v. Campus Crafts, Inc. and Bradco Supply Co., Inc. v. V. Comly · filed 2021-10-27(a)(1)

As indicated, the automatic stay under Section 362(a)(1) of the federal Bankruptcy Code, 11 U.S.C. §362(a)(1), only provides protection to the bankruptcy debtor and not to a non-debtor third party absent extraordinary circumstances.

Section 362(a) does not automatically stay claims against a nondebtor co-defendant; the bankruptcy court must first extend the stay under its equity jurisdiction.

HML Holdings, LLC v. Romeros LLC · filed 2021-10-12(a)

Nevertheless, the Ninth Circuit has instructed that “[e]ven if [one of these unusual circumstances applies], the bankruptcy court”—not the district court—“would first need to extend the automatic stay under its equity jurisdiction[.]” ... Considering this authority, the Court will not stay the entire action by extending the automatic stay pursuant to 11 U.S.C. § 362(a).

The automatic stay applies to claims against the debtor, but does not automatically extend to a separately formed LLC owned by the debtor when he will not be individually liable for its fault.

Louisiana Marine Operators, LLC v. JRC Marine, LLC · filed 2021-08-03(a)(1)

As Fitch has filed such a petition, the claims against him are automatically stayed. ... In this case, allowing LMO to proceed against JRC will not run contrary to the purpose of the automatic stay as Fitch will not be held individually liable for any fault found by JRC. Further, this Court has not been provided with any evidence that Fitch’s bankruptcy filing has been extended to JRC or that JRC has filed its own bankruptcy petition.

Section 362(a)(1) ordinarily stays actions against the debtor, but may extend to a nondebtor when the debtor is effectively the real defendant or stay protection is essential to reorganization.

SHREE JI, INC. VS. WATCHUNG LIQUORS (L-3820-17, MIDDLESEX COUNTY AND STATEWIDE) · filed 2021-06-08(a)(1)

Nonetheless, "courts have extended the automatic stay to nonbankrupt codefendants in 'unusual circumstances,'" under 11 U.S.C. § 362(a)(1). McCartney v. Integra Nat'l Bank N., 106 F.3d 506, 510 (3d Cir. 1997) (quoting A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986)). Courts have extended the stay in two particular situations, where: (1) "there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor"; and (2) the "stay protection is essential to the debtor's efforts of reorganization." Ibid. Neither of those situations is applicable in the present matter.

Section 362(a)(6) does not stay collection efforts against a debtor’s affiliated LLC unless the LLC files its own bankruptcy petition.

Zack, Sr. v. Transportation Alliance Bank d/b/a TAB Bank · filed 2020-12-21(a)(6)

The law, however, provides that KBZ cannot avail itself of the protections of the automatic stay absent it filing its own bankruptcy petition.

Section 362(a) does not stay termination of an agreement between nondebtors that changes their lien priority without creating, perfecting, or enforcing a lien against the debtor or estate property.

Clearpoint Chemicals, LLC · filed 2020-12-18(a)(4)-(5)

This Court does not construe the automatic stay to encompass contractual agreements by non-debtors and does not find enlargement of its protections warranted in the context of this Motion for Relief.

Section 362 does not automatically stay claims against non-debtor defendants merely because those claims are core bankruptcy proceedings; an extension of the stay must be requested.

Tailored Fund CAP LLC v. RWDY, Inc. · filed 2020-10-29(a)

Even if the Court were to hold that plaintiff's claims against all defendants were core proceedings, that would not somehow entitle defendants to a stay of proceedings unless defendants requested an extension of the stay.

Section 362’s automatic stay can extend to non-debtors when they share an identity of interests with the debtor, including in a Chapter 7 case without reorganization.

Raudonis v. RealtyShares Inc. · filed 2020-12-16(a)(1)

I agree with defendants that whether the non-debtor and debtor share an identity of interests is a question separate and apart from that of whether “the third-party action will have an adverse impact on the debtor’s ability to accomplish reorganization.” See In re Slabicki, 466 B.R. at 580. Under either circumstance, a stay can be extended to non-debtors.

Section 362’s automatic stay is governed by the bankruptcy court, which decides whether to extend it to defendants who have not filed for bankruptcy.

Aerodynamics Incorporated v. Caesars Entertainment Operating Company, Inc. · filed 2020-10-09

Finally, I ... decline those defendants’ invitation to extend the automatic stay to all defendants in this case?’ ... because the automatic stay is governed by the bankruptcy court.

Section 362 generally stays proceedings against a bankruptcy debtor, and unusual circumstances can justify staying proceedings against closely connected nondebtor codefendants when continuing the case would burden the debtor.

Simpson v. Lincoln Heritage Council, Inc. Boy Scouts of America · filed 2020-09-23

Given the entanglement of the Non-Stayed Defendants and the Boy Scouts, this Court finds granting the requested stay as to the Non-Stayed Defendants would further the purpose of the automatic stay—allowing the Boy Scouts a breathing spell and permitting time to formulate a reorganization plan. See S.Rep. No. 95-989, 95th Cong., 2d Sess. 54-55 (1978) (discussing the purposes of the automatic stay). The Court also finds that the Non-Stayed Defendants have demonstrated sufficient unusual circumstances to justify a stay of proceedings.

Section 362 stays proceedings against a bankruptcy debtor but generally does not extend the stay to the debtor’s codefendants.

Steele v. Berexco LLC · filed 2019-07-26

While section 362 of Title 11 extends the stay provisions of the Bankruptcy Code to the “debtor,” the rule followed in the Tenth Circuit and by the majority of other circuit courts is that the stay provision does not extend to the debtor’s co- defendants.

Section 362 generally stays proceedings against the bankruptcy debtor but does not extend the automatic stay to the debtor’s codefendants.

Mae v. Lakeview Towers LLC · filed 2019-05-10

While 11 U.S.C. § 362 extends the automatic-stay provisions of the Bankruptcy Code to the bankruptcy “debtor,” the rule followed in the Tenth Circuit and by the majority of other circuits is that the stay provision does not extend to the debtor’s codefendants.

Section 362(a)(1) protects a debtor’s principals from a proceeding nominally against them when their interests are identical to the debtor’s and the proceeding is effectively directed at the debtor.

In re Congregation Birchos Yosef · filed 2015-08-24(a)(1)

Under well-established casé law, the fact that, nominally, these actions were against the Debtor’s principals therefore is of no legal effect. Because of the principals’ identity of interest here with the Debtor, the automatic stay applies to protect them from the beis din.

Section 362(a)(1) stays judicial actions against a debtor’s alter ego corporations when they were inseparable from the debtor before the bankruptcy filing; a postpetition judgment against them violates the stay and is void.

Ng v. Adler (In re Adler) · filed 2013-07-11(a)(1)

As the Debtor and the alter ego Corporations were at all relevant times one and the same entity, the automatic stay in § 362(a)(1) foreclosed any judicial action against the Debtor and the Corporations alike upon the Debtor’s filing of his individual bankruptcy petition on July 28, 2004. Consequently, to the extent any prepetition judicial action against the Corporations continued into the post-petition period, that proceeding violated § 362(a)(1) and was void as a matter of law.

Section 362(a) does not automatically protect a debtor’s guarantors; extending the stay to them requires unusual circumstances, such as an action effectively against the debtor or an adverse effect on reorganization.

First Bank Puerto Rico Inc. v. Foti (In re International Home Products Inc.) · filed 2013-04-30(a)

This court finds that Mr. Foti’s allegations are insufficient to establish “unusual circumstances” which consist of establishing that Mr. Foti and the Debtors “enjoy such an identity of interests that the suit of the non-debtor is essentially a suit against the debtor;” or that the “third party action will have an adverse impact on the debtor’s ability to accomplish reorganization.”

Section 362(a)(1) and (a)(3) can stay a suit against a nondebtor when the parties’ intertwined interests, harm to the debtor’s debt adjustment, and possible preclusive effect create unusual circumstances.

In re Jefferson County · filed 2013-04-15(a)(1), (a)(3)

The Court holds that based on the unusual circumstances presented in this case — specifically, the identity of interests between JPMorgan and the County, the effect on the County’s reorganization efforts, and the potential preclusive effect of a judgment in the Assured Action — that the automatic stay of 11 U.S.C. § 362 applies to the Assured Action.

A stay tied to Section 362(a) may extend to non-debtors under unusual circumstances and remain in place when those circumstances persist.

Cruz-Aponte v. Caribbean Petroleum Corp. · filed 2013-01-24(a)

Because none of the parties demonstrate (1) that the “unusual circumstances” warranting a stay in 2010 do not now exist; or (2) that their request to separate the limitation of liability action from the consolidated cases can be reconciled with their prior requests to consolidate and stay all proceedings, the Court declines to lift the stay to allow the limitation of liability action to proceed independently.

Section 362(a) does not stay an action against non-debtors when the action has no potential impact on the debtor’s estate.

Ritchie Capital Management, L.L.C. v. Jeffries · filed 2011-09-06(a)

The unusual-circumstance exception is not implicated where, as here, the new litigation has no potential impact on the bankrupt entity. Because no receivership defendant is named in Ritchie’s action and none is in privity with Jeffries or Chee- Awai, the court’s findings in the present case cannot have a binding effect on Petters or other receivership defendants. Tyus v. Schoemehl, 93 F.3d 449, 453 (8th Cir. 1996), abrogated on other grounds by Taylor v. Sturgell, 553 U.S. 880 (2008). Thus, just like the bankruptcy court could not stay Ritchie’s action under § 362, the receivership court had no power to prevent Ritchie’s suit from going forward.

Section 362(a) does not automatically protect a nondebtor guarantor’s property unless the court extends the stay.

In Re Riverfront Properties, LLC · filed 2009-05-22(a)

As a preliminary matter, the § 362(a) stay does not protect the Kokolis property unless extended by the Court.

Section 362(a) generally does not extend the automatic stay to nondebtor defendants; indemnification concerns do not justify an extension when their litigation will not prejudice the debtor’s reorganization.

In Re Sunbeam Securities Litigation · filed 2001-03-26(a)

Moreover, the indemnification concerns raised by the individual defendants do not warrant a stay. ... Therefore, continued action against the individual defendants will not have an adverse effect upon Sunbeam’s reorganization, and no prejudice will result to Sunbeam.

Section 362’s automatic stay generally covers the debtor but does not extend to the debtor’s co-defendants.

Ratts v. Board of County Com'rs, Harvey County, KS · filed 2001-03-28

While § 362 extends stay provisions of the Bankruptcy Code to the “debtor,” the rule followed in the Tenth Circuit and by the majority of other circuits is that the stay provision does not extend to the debtor’s co-defendants. ... Therefore, the case continues unimpeded as against the remaining defendants.

The automatic stay extends to proceedings against a nondebtor when the debtor and nondebtor have such an identity that a judgment against the nondebtor would bind the debtor.

Chapman Lumber v. Scalzo, No. Cv 00 0084042s (Mar. 15, 2001) · filed 2001-03-15(a)(1)

Where, however, there is such an identity between a debtor (Scalzo) and a non-debtor (Martino) that a judgment against the non-debtor would be binding upon the debtor, the protection afforded the debtor (the automatic stay) must be extended to enjoin litigation against the non-debtor. ... Therefore the court finds that the automatic stay under 11 U.S.C. § 362 applies to the matter now before the court and stays all proceedings until further action by the Bankruptcy Court in case number 01-50112.

Section 362(a)(1) does not extend a debtor’s automatic stay to nondebtor individuals when a judgment against them would not effectively be a judgment against the debtor.

Fonda Group, Inc. v. Lewison · filed 2001-02-01(a)(1)

Since there is no assertion that a judgment against the Lewi-sons would in effect be a judgment against NPE and NPP, this exception does not apply to the case at bar and the motion for the stay must be denied.

Section 362(a)(1) and (3) can stay proceedings against a nondebtor affiliate when its interests are united with the debtor’s and the proceedings are intertwined with claims against the debtor.

Superpumper, Inc. v. Nerland Oil, Inc. · filed 2000-12-21(a)(1), (a)(3)

When the automatic stay of 11 U.S.C. § 362(a)(1) and (3) is considered with our finality jurisprudence, we conclude the district court erred in confirming the arbitration decision as to West Fargo Truck Stop and deciding the proceeding was stayed as to Nerland Oil. We conclude the unity of interest between Nerland Oil and West Fargo Truck Stop and the interrelationship of the Belfield freight agreement with the purchase agreement, coupled with our policy against piecemeal litigation, automatically stayed the entire arbitration decision pending Nerland Oil’s bankruptcy proceeding.

Section 362 does not automatically stay judicial proceedings against nondebtor guarantors when the debtor files a bankruptcy petition.

First Union National Bank v. Rath, No. Cv 99-0431811s (Dec. 29, 2000) · filed 2000-12-29

Because the defendants are nondebtor guarantors they are not entitled to an automatic stay of judicial proceedings upon the filing of a debtor's bankruptcy petition.

Section 362(a)(1) does not extend the automatic stay to solvent co-defendants absent unusual circumstances; an asserted contractual agency relationship alone does not warrant extension.

Parry v. Mohawk Motors of Michigan, Inc. · filed 2000-12-29(a)(1)

In this case, Plaintiff has failed to demonstrate that “unusual circumstances” warrant the extension of the automatic stay beyond Defendants Pritchard and APIC to the remaining solvent co-defendants.

Section 362’s automatic stay protections generally do not extend to nondebtor third parties absent extraordinary circumstances.

Bankers Trust Co. v. Tax Claim Bureau of Delaware County · filed 1999-02-01

It is well settled that, absent extraordinary circumstances, the automatic stay protections afforded a debtor under 11 U.S.C. §362 do not apply to non-debtor third parties.

Section 362's automatic stay does not protect nondebtors solely because of their relationship to the debtor when the judgment does not involve a claim belonging to the bankruptcy estate.

Tierra Petroleum, Inc. v. Walker (In Re Tierra Petroleum, Inc.) · filed 1999-01-29

Therefore, the automatic stay does not protect the Potters and this Court cannot extend its reach to the Potters simply because of their relationship to the Debt- or.

Section 362(a)(6) does not bar collection of an individual’s debt when a corporation, rather than the individual, is the bankruptcy debtor.

C.R. Bliss Co. v. Vlahos, No. Cv97 0327601 S (Jan. 14, 1999) · filed 1999-01-14(a)(6)

IT IS FOUND that the collection of these moneys does not violate 11 U.S.C. § 362 (a)(6), in that the debt is that of the defendant, Dean Vlahos, individually, and not that of U.S. Sales Corp., the entity which was the subject of the bankruptcy CT Page 363 proceedings.

Section 362(a)(1) extends a debtor’s automatic stay to a nondebtor only when necessary to protect the debtor’s reorganization; a theoretical risk of harm is insufficient.

Gray v. Hirsch · filed 1999-01-08(a)(1)

The broader rule here is that a debtor’s stay may extend to a non-debtor only when necessary to protect the debtor’s reorganization.

Section 362(a) does not stay a creditor’s independent claims against a nonbankrupt third party when those claims are not property of the debtor’s estate.

Fidelity Nat. Title Ins. Co. of New York v. Bozzuto · filed 1998-11-12(a)(3)

Summary judgment must denied as to Counts III and IV, which are independent claims of Fidelity’s that could not have been asserted on its behalf by the Trustee, and thus are neither affected by § 362 nor barred by res judicata.

Section 362(a) generally stays proceedings against the bankruptcy debtor, and a nondebtor seeking its protection must establish an exception to that rule.

555 M Manufacturing, Inc. v. Calvin Klein, Inc. · filed 1998-05-20(a)

The general rule is that the automatic stay provision is generally only available to the bankruptcy debtor and does not bar suits against the debtor’s insurers, guarantors, or sureties. ... Assuming for the purpose of this discussion that CK has standing to raise this issue, the court finds that CK has failed to show that this ease falls within either of the two above exceptions.

The automatic stay does not bar proceedings to enforce a court order against a nonbankrupt third party whose interests are not so closely tied to the debtor that the debtor’s assets would be jeopardized.

Fox Valley Construction Workers Fringe Benefit Funds v. Pride of the Fox Masonry & Expert Restorations · filed 1998-03-20(a)

The automatic stay does not touch proceedings to enforce a court order against non-bankrupt third parties.

Section 362’s automatic stay generally protects the debtor, but does not extend to nondebtor co-defendants.

General Building Supply v. Sundwall, No. Cv92-0534894 S (Dec. 23, 1997) · filed 1997-12-23

As a general proposition, the automatic stay afforded under 11 U.S.C. does not apply to non-debtor co-defendants. As a general rule, the automatic stay applies only to debtors who have sought to avail themselves of the protection of the bankruptcy laws.

Section 362 stays an action asserting alter ego claims against nondebtor defendants when those claims involve property of the debtor’s bankruptcy estate.

Holcomb v. Pilot Freight Carriers, Inc. · filed 1990-09-14

The Court finds that both the Holcomb and Kinton plaintiffs seek to hold defendants liable based on the alter ego doctrine. Such an action involves the property of the Pilot bankruptcy estate. In accordance with 28 U.S.C. § 157(a) and Standing Order No. 10, this action should be referred to the bankruptcy judges of this District. Furthermore, the automatic stay provisions of 11 U.S.C. § 362 apply to this action.

Section 362(a)(3) bars action against a nondebtor when it would inevitably harm property of the debtor’s estate.

48th Street Steakhouse, Inc. v. Rockefeller Group · filed 1987-12-15(a)(3)

While it is true that I.S.H. is an incidental beneficiary of our decision, this result is permissible where a non-debtor's interest in property is intertwined, as in the present case, with that of a bankrupt debtor. If action taken against the non-bankrupt party would inevitably have an adverse impact on property of the bankrupt estate, then such action should be barred by the automatic stay.

Section 362 does not stay collection against nondebtor shareholders when the creditor neither proceeds against the debtor nor seeks possession of estate property.

River Family Farms, Inc. v. Federal Land Bank of Omaha (In Re River Family Farms, Inc.) · filed 1987-12-18(a)(3)

At the outset, enforcement actions of the FLB are not restrained by the automatic stay as 11 U.S.C. § 362 stays actions against the debtor and actions to obtain possession of property of the estate. The FLB is not pursuing an action against the Debtor nor is the FLB attempting to obtain possession of any property of the estate of the Debtor. Therefore, the Debtor’s request for an order directing the FLB to show cause why it should not be held in contempt for violation of 11 U.S.C. § 362 is without merit.

Section 362(a) does not automatically stay an action against a debtor corporation’s officer-guarantor merely because the corporation indemnifies its officers.

Codfish Corp. v. Federal Deposit Insurance Corp. (In Re Codfish Corp.) · filed 1988-05-31(a)

The practice of indemnifying corporate officers and directors is common, ... and is not by itself sufficient to warrant that automatic stay provisions of 11 U.S.C. § 362(a) be extended under 11 U.S.C. § 105(a) to officers who act as guarantors to a debtor corporation.

Section 362(a)(1) may stay a creditor’s suit against a nondebtor guarantor who is entitled to indemnification from the debtor.

First National Bank of Louisville v. Kanawha Trace Development Partners (In Re Kanawha Trace Development Partners) · filed 1988-06-29(a)(1)

As a guarantor on the debtor’s note, Thornton received a right to indemnification for any sums he became libel for as a result of his position as guarantor. ... As a result of the Fourth Circuit’s Picci-nin decision, this Court must find that a stay should be applied to First National’s suit in the United States District Court against Thornton.

Section 362(a)(3) does not stay a creditor’s suit on a claim the creditor owns against a third party, even if the debtor has a separate related claim.

Esselen Associates, Inc. v. Crysen/Montenay Energy Co. (In Re Montenay Energy Co.) · filed 1989-08-10(a)(3)

If, however, the right of action belongs to the creditor, it is not part of the estate and the stay does not apply.

Section 362(a) stays a creditor’s action against third parties that seeks to satisfy the debtor’s obligation by challenging a transfer of estate property as fraudulent.

National Labor Relations Board v. Martin Arsham Sewing Company, and Martin Arsham · filed 1989-08-15(a)

If, however, a creditor brings a collateral action against third parties (including the debtor corporation’s officers) in an attempt to satisfy the bankrupt’s obligation by attacking, as fraudulent, a property transfer to these third parties such action is stayed under Code section 362(a).

Section 362(a) does not automatically stay an action against nondebtor codefendants whose liability is not imputed to the debtor.

In Re Crazy Eddie Securities Litigation · filed 1989-08-30(a)

The Debtor and the defendants in the present case are not so bound by statute or contract that the liability of the defendants is automatically imputed to the Debtor by operation of law. ... The court confirms that the action may proceed as against all defendants other than the Debtor.

Section 362(a)(3) stays direct billing of a debtor’s members when those collection efforts threaten the debtor’s goodwill and subscriber contracts as estate property.

Maxicare Health Plans, Inc. v. Centinela Mammoth Hospital (In Re Family Health Services, Inc.) · filed 1989-09-22(a)(3)

The court also finds that the debtor’s good will and its contracts with subscribers and members are so essential to the survival of the debtor that they constitute property of the estate as that term is defined in Bankruptcy Code section 541(a)(1). Accordingly, direct billing actions against Maxicare members are stayed under Bankruptcy Code section 362(a)(3).

Section 362(a)(1) does not stay an action against a nondebtor when a judgment in that action would not bind the debtor.

In Re Rubenstein · filed 1989-10-03(a)(1)

Accordingly, I conclude that the debtor would not be bound by any judgment that the Committee might obtain against the Bank in state court and that therefore the Bank is not protected by the automatic stay.

Section 362(a)(1) and (3) do not stay an action against a debtor’s guarantors when a judgment against them would not bind the debtor or affect estate property.

In Re Murall, Inc. · filed 1989-12-18(a)(1), (a)(3)

As there is no binding effect on the debtor, or his property, the automatic stay pursuant to 11 U.S.C. § 362(a)(1) and (3) is inapplicable.

Section 362(a)(6) bars collection acts against the debtor, but does not prevent creditors from proceeding against nondebtor entities liable with the debtor.

Northeast Glass, Inc. v. Alpen, Inc. (In Re Northeast Glass, Inc.) · filed 1990-03-23(a)(6)

The Bankruptcy Code thus gives ample cause to construe § 362(a)(6) as enjoining only acts against the debtor.

Section 362(a) does not stay a subcontractor’s mechanic’s lien foreclosure against a nondebtor owner when the debtor contractor need not be joined and the lien reaches only the owner’s real estate.

Deluxe Sheet Metal, Inc. v. Plymouth Plastics, Inc. · filed 1990-06-25(a)

Since Wright, the debtor-contractor, was not a necessary party to the foreclosure action, the appellants would not have violated the automatic stay by commencing their action to enforce their liens and therefore, the time period in IND.CODE § 32-8-8-6 was not tolled.

Section 362(a)(3) stays a creditor’s action against nondebtor parties when it seeks to control an estate cause of action, even if the creditor requests only money damages.

AP Industries, Inc. v. SN Phelps (In Re AP Industries, Inc.) · filed 1990-07-26(a)(3)

The Defendants cavalierly state that § 362(a) of the Code is not implicated by the New York Actions because the suit seeks money damages from various non-debtor third parties and does not seek possession or control of any property of the Debtor’s estate. The Defendants are gravely mistaken. This is precisely the type of activity and burden to the estate which § 362 of the Code was intended to alleviate. The New York Actions are a transparent attempt by the Defendants to “end run” the automatic stay. The actions constitute acts to exercise control over property of the estate in violation of § 362 of the Code.

Section 362(a) does not prevent claimants from arbitrating claims against a nondebtor for that nondebtor’s conduct involving collateral pledged to the debtor.

Cameron v. J.T. Moran Financial Corp. (In Re J.T. Moran Financial Corp.) · filed 1990-09-05(a)

To the extent that the plaintiffs seek to recover for the loss of their pledged collateral because of conduct on the part of Securities Settlement Corp., they are not restricted by the automatic stay from seeking to compel Securities Settlement Corp. to submit to arbitration with respect to such conduct.

Section 362(a)(3) stays litigation against nondebtor officers and directors when continuing it would diminish the debtor’s property interest in indemnification insurance.

Circle K Corp. v. Marks (In Re Circle K Corp.) · filed 1990-11-14(a)(3)

Based on the evidence and papers submitted to date, continued prosecution of the District Court security litigation affects debtor’s property interests in a valuable estate asset in violation of the automatic stay.

Section 362(a)(1) can stay an action against a nondebtor officer when indemnification makes a judgment against the officer directly affect the debtor’s assets and reorganization.

North Star Contracting Corp. v. McSpedon (In Re North Star Contracting Corp.) · filed 1991-03-17(a)(1)

A stay pursuant to § 362(a) can, under certain circumstances, apply to a non-bankrupt party. ... Second, Mr. Lovece has a right of indemnification with respect to North Star and thus any recovery by McSpedon in the state court action will adversely affect North Star’s assets.

Section 362’s automatic stay does not protect third parties or property belonging to them.

Altchek v. Altchek (In Re Altchek) · filed 1991-03-04

Section 362 of the Bankruptcy Code does not protect third parties or their property.

Section 362(a) stays a shareholder derivative action against entities closely identified with the debtor when relief in that action would affect a bankruptcy court-approved settlement.

Garrity v. Hospital Consultants, Inc. (In Re Neuman) · filed 1991-04-18(a)

Given the relationship between CCF, Rebco, the Foundation and the Neumans, specifically that the Neumans own approximately 78% of the CCF stock and that Rebco and Foundation are wholly owned subsidiaries of CCF, it appears that there is such an identity between the entities as to render the state court suit in violation of the stay. This conclusion is supported by the fact that any relief in the state court would necessarily affect the settlement agreement approved by the Bankruptcy Court. It should also be noted that despite Ehrlich’s and Baum’s contentions to the contrary, the complaint names Carl Neu-man both individually and as trustee. Thus, we agree with the Bankruptcy Court’s determination that the state action did violate the stay.

Section 362(a)(1) does not stay an action against a nondebtor when the stay would not aid the debtor’s reorganization, and § 362(a)(3) does not apply merely because a judgment against the nondebtor could create an indemnity claim against the estate.

Algemene Bank Nederland, N v. v. Hallwood Industries, Inc. · filed 1991-10-30(a)(1), (a)(3)

Addressing subsection (a)(1) first, it is clear that a de facto stay of the action against Hailwood does not contribute to the potential reorganization of Retail Acquisition Corporation. ... Hailwood also does not suggest that its assets are actually RAC’s or are controlled by it; it merely argues that any recovery by Algemene against it will result in an equivalent indemnity claim by it against RAC’s bankruptcy estate. Accordingly, subsection (a)(3) is inapplicable.

Section 362(a)(3) automatically stays a creditor’s suit against a debtor partnership’s general partners when the debtor’s right to compel their contributions is property of the estate.

Litchfield Co. of South Carolina Ltd. Partnership v. Anchor Bank (In Re Litchfield Co. of South Carolina Ltd. Partnershi · filed 1992-01-03(a)(3)

Because the right to compel contributions from general partners of a partnership is property of the estate, Code § 362(a)(3) prevents the prosecution of the defendant’s action against the partners.

Section 362 does not protect a nondebtor spouse or her own wages from collection of a joint tax debt when those wages are not property of the bankruptcy estate.

Goldsby v. United States (In Re Goldsby) · filed 1992-01-13

It is apparent from the Bankruptcy Code and the case law that non-debtors are not protected from the IRS collection action. Aside from the co-debtor stays provided in sections 1201 and 1301, there is no provision protecting non-debtors or their property.

Section 362’s automatic stay does not extend to independently liable personal guarantors merely because the debtor has agreed to indemnify them.

Aetna Casualty & Surety Co. v. Namrod Development Corp. · filed 1992-04-09(a)

Although the Evangelistas are officers of Namrod, the action against them is not based upon any acts committed in their capacity as Namrod’s officers, but results from their personal guarantees. The very purpose of having defendants personally guaranty the payment and performance bonds was to provide an alternate avenue of recovery in case payment from Namrod was not forthcoming.

Section 362 does not stay an action against a nondebtor surety on its independent, primary bond obligations.

Foley Co. v. Aetna Casualty & Surety Co. (In Re S & M Constructors, Inc.) · filed 1992-09-08(a)(1)

Accordingly, a non-debtor surety, who is being sued on its surety contract and has obligations that are “ ‘independent’ and primary, not derivative of those of the debtor”, is not protected by the automatic stay.

Section 362(a) does not stay foreclosure on property owned by a nondebtor merely because the debtor is liable on the secured debt and may owe a deficiency.

Saratoga Group, Ltd. v. Peoples National Bank (In re Geris) · filed 1992-08-19(a)

The interest Geris has in seeing that the value of the property, when sold to satisfy the debt, is maximized, thereby limiting the exposure of the bankruptcy estate on the underlying debt, is far too attenuated to warrant extending the automatic stay protections of the Bankruptcy Code to prevent Peoples National Bank from foreclosing on the Manassas property.

Section 362(a) does not stay foreclosure on property the debtor does not own merely because the debtor owes the secured debt and may face a deficiency.

In Re Geris · filed 1992-09-28(a)

The interest Geris has in seeing that the value of the property, when sold to satisfy the debt, is maximized, thereby limiting the exposure of the bankruptcy estate on the underlying debt, is far too attenuated to warrant extending the automatic stay protections of the Bankruptcy Code to prevent Peoples National Bank from foreclosing on the Manassas property.

A nondebtor seeking to extend the automatic stay to litigation against itself must seek the extension in bankruptcy court.

Metro Bulletins Corp. v. Soboleski · filed 1993-03-02

Despite a split of authority, the weight of the case law indicates that a nondebtor, seeking to extend the stay beyond the debtor, must move for the extension in the bankruptcy court.

Section 362(a)(6) does not stay foreclosure of a nondebtor’s property to collect a nondebtor’s debt when the debtor’s leasehold interest remains protected.

In Re Farb Investments Interests Ltd. · filed 1993-06-21(a)(6)

The automatic stay does not apply to protect PCA, a non-debtor, from Aetna’s attempt to foreclose on the subject properties. The automatic stay is applicable to Farb Investments only to the extent that it protects its leasehold interest in the properties from being disturbed or destroyed. Aetna has not violated 11 U.S.C. § 362 by taking steps toward its goal of foreclosing on PCA’s ownership interest in the subject properties.

Section 362(a)(1) does not automatically stay an action against a nondebtor guarantor merely because the debtor has filed for bankruptcy.

Central Buffalo Project Corp. v. Edison Bros. Stores, Inc. · filed 1994-11-16(a)(1)

Plaintiff has sued Edison Brothers on its guaranty, and it is settled law that Edison Brothers’ status as guarantor is not an unusual circumstance justifying the imposition of the automatic stay pursuant to section 362 (a) (1) (see, Rosenbaum v Dane & Murphy, 189 AD2d 760, 761; Milliken & Co. v Stewart, 182 AD2d 385, 386; Marine Bank v Woodworth, 158 AD2d 953, 954; see also, Credit Alliance Corp. v Williams, 851 F2d 119).

Section 362(a)(1) does not extend the automatic stay to a nondebtor codefendant that is separately liable on the underlying debt.

Guarantee Mutual Life Co. v. Crounse (In Re Eugene L. Pieper, P.C.) · filed 1996-08-22(a)(1)

The general rule is that even though a debtor is entitled to the protection of the automatic stay, that protection does not extend to co-defendants or co-judgment debtors of the bankruptcy debtor.

Section 362(a) stays actions against pension plan assets once the court determines they are property of the bankruptcy estate.

In Re Lowenschuss · filed 1996-11-01(a)

All actions against the assets of the Pension Plan are hereby stayed pursuant to § 362(a).

Section 362(a) does not stay arbitration of a governance dispute between nondebtor equity holders merely because its outcome may affect the debtor’s business.

Matter of American Media Distributors, LLC · filed 1998-02-05(a)

Arbitration of Movants’ dispute with Respondents is not barred by the automatic stay. It is a simple contract dispute between two sets of equity holders who are non-debtor parties, albeit a dispute whose outcome may have a significant effect on the conduct of Debtor’s day-to-day affairs. Such a potential effect does not, however, bring the matter within the prohibition imposed by 11 U.S.C. § 362(a) on actions involving debtors and their property.

Section 362(a)(1) does not automatically stay proceedings against a debtor’s nonbankrupt co-defendant, even when their claims are closely related.

Seiko Epson Corporation and Epson America, Inc. v. Nu-Kote International, Inc. And Pelikan Produktions, A.G., Defendants · filed 1999-10-19(a)(1)

It is clearly established that the automatic stay does not apply to non-bankrupt co-defendants of a debtor “even if they are in a similar legal or factual nexus with the debtor.”

Section 362(a)(1) automatically stays a prebankruptcy action against the debtor, but the stay does not automatically extend to a nondebtor co-defendant.

Lukas, Nace, Gutierrez & Sachs, Chartered v. Havens · filed 2000-02-25(a)(1)

The Magistrate Judge is imminently correct in his determination that an automatic stay does not extend to a debt- or’s co-defendant, in this case Mr. Havens.

Section 362(a) stays proceedings against the debtor, but does not stay proceedings against nondebtor co-defendants merely because they are sued with the debtor.

In Re Southwestern Bell Telephone Co. · filed 2000-08-24(a)

However, the stay only operates against the debtor, and does not operate against non-debtors or even co-debtors, co-tortfeasers, or co-defendants.

Section 362 stays proceedings against a debtor corporation, including a subpoena seeking its records, unless the bankruptcy court authorizes continuation.

Walden Printing Graphics v. Fatta, No. Cv00-0158866s (Sep. 29, 2000) · filed 2000-09-29(a)(1)

The subpoena on Noreen Fatta seeks production of documents relating to the defendant debtor corporation which is subject to the automatic bankruptcy stay provision, 11 U.S.C. § 362 . A continuation of such proceedings requires an order from the bankruptcy court.

Section 362 automatically stays claims against a debtor but generally does not stay claims against nondebtor co-defendants.

Webb v. AC&S Inc · filed 2002-01-03(a)

Therefore, while § 362 acted to stay any claims against the Federal-Mogul entities, including Garlock’s putative claim of contribution, it carried no force to stay actions as between the remaining co-defendants, the debtor and the various plaintiffs.

Section 362 stays claims against a Chapter 11 debtor, including a co-defendant’s contribution claim, but does not extend the stay to unrelated nondebtor co-defendants.

Royer v. AC & S Inc · filed 2002-01-03

Therefore, while § 362 acted to stay any claims against the Federal-Mogul entities, including Garlock’s putative claim of contribution, it carried no force to stay actions as between the remaining co-defendants, the debtor and the various plaintiffs.

Section 362 can stay proceedings against a nondebtor codefendant when the debtor is effectively the real defendant and a judgment against the codefendant would effectively be a judgment against the debtor.

Evans v. Acands, Inc · filed 2002-01-03

By exception, a bankruptcy court may invoke § 362 to stay proceedings against nonbankrupt co-defendants where such identity between the debtor and the third-party defendant exists that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor.

Section 362’s automatic stay protects the debtor but does not extend to a separate nondebtor corporation unless the bankruptcy court grants an extension.

Jo-Rene Corporation v. Jastrzebski, Unpublished Decision (4-4-2002) · filed 2002-04-04

The automatic stay applies only to Jastrzebski unless and until the bankruptcy court decides differently.

Section 362(a)(4) does not bar postpetition loans to a nonbankrupt corporation merely because its shareholder is in bankruptcy and a prepetition lien on the shareholder’s property secures the loans.

Beeler v. Jewell (In re Stanton) · filed 2002-09-13(a)(4)

A business relationship of stock ownership does not ipso facto extend the automatic stay to non-bankrupts. The lien against the Stantons' house was created when they gave the factor a second mortgage, prior to the bankruptcy filing. That was a conveyance of an interest in real property, namely, a lien. The subsequent advances merely affected how much money the lien secured.

Section 362(a) does not extend the automatic stay to litigation against a nondebtor that lacks sufficient identity of interest with the debtor.

In Re Kmart Corp. · filed 2002-11-15(a)

In light of the forgoing, Liverpool has failed to show that sufficient identity exists between it and Kmart to justify extending the automatic stay to the Texas proceeding.

Section 362(a)'s automatic stay can extend to a nondebtor when litigation against it would have an immediate adverse economic consequence for the debtor's estate.

Queenie, Ltd. v. Nygard International · filed 2003-02-25(a)

The automatic stay can apply to non-debtors, but normally does so only when a claim against the non-debtor will have an immediate adverse economic consequence for the debtor's estate. ... Under these principles, the stay applies to Queenie because it is wholly owned by Gardner, and adjudication of a claim against the corporation will have an immediate adverse economic impact on Gardner.

Section 362(a) can extend the automatic stay to a nondebtor third party when an action against that party is an attempt to collect a bankrupt debtor’s obligation and circumvent the stay.

Reliant Energy Services, Inc. v. Enron Canada Corp. · filed 2003-03-22(a)

Consequently, the Court concludes that present action constitutes one of the “unusual circumstances” where the automatic stay extends to a third party.

The automatic stay does not protect a nondebtor codefendant from an independent conversion claim when the codefendant fails to show that an individual judgment would jeopardize the debtor’s assets.

Gulf States Petroleum Corporation and Randall Clayton May v. General Electric Capital Auto Lease · filed 2004-03-25

May has not established that Gulf States Petroleum’s assets will be jeopardized by a judgment taken against him individually. Accordingly, the automatic bankruptcy stay did not apply to GECAL’s conversion claim against May.

Section 362(a)’s automatic stay does not extend to a nondebtor principal when an amended injunction is collateral to the bankruptcy proceedings and affects neither the debtor’s assets nor the principal’s participation in reorganization.

Gucci, America, Inc. v. Duty Free Apparel, Ltd. · filed 2004-06-24(a)

The Court concludes that, because the amended injunction would be entirely collateral to the bankruptcy proceedings, the stay should not be judicially extended. ... Soren’s opposition to Gucci’s motion fails to indicate a special circumstance of this sort. An amendment of the judgment as to Soren alone would have no effect on DFA’s existing assets or on Soren’s freedom to participate fully in the company’s financial reorganization.

The automatic stay does not extend to nondebtor defendants absent unusual circumstances justifying that protection, where extension would merely delay the action without benefiting the debtor’s estate.

Runkle v. Genesis Worldwidw II, Inc. · filed 2005-07-26

Upon our own review of the record, we agree with the district court that “the GWII Defendants have not brought forth any evidence of unusual circumstances which would justify an extension of the automatic stay to their protection or that would permit the court to stay the proceedings on equitable grounds. An extension of the stay would only delay [Runkle’s] action, with no benefit to the debtor’s estate.”

Section 362(a)(1)'s automatic stay does not protect a nondebtor corporate officer jointly and severally liable for unpaid wages where no unusual circumstances justify extending the stay.

DeWitt v. Daley · filed 2006-01-12(a)(1)

In short, Defendant has failed to convincingly demonstrate to this Court what “unusual circumstances” exist in this case which would warrant extending § 362’s stay provision to Defendant, a non-debtor.

Section 362(a)(1)'s automatic stay does not extend to nondebtor former officers absent unusual circumstances showing that litigation against them would harm the debtor's estate or reorganization.

In Re MCSi, Inc. · filed 2007-07-05(a)(1)

The § 362(a)(1) automatic stay is generally considered to be available only to the debtor, and not to third-party solvent defendants. ... Without demonstrating the risk of harm to the debtor estate, Stanley and Peppel are not deserving of the benefits of the bankruptcy stay.

Section 362(a)'s automatic stay generally does not apply to suits against non-debtors, and extending stay protection to them requires satisfaction of the usual preliminary injunction standard.

Solidus Networks, Inc. v. Excel Innovations, Inc. · filed 2007-09-07(a)

Moreover, we have consistently held that the automatic stay does not apply to suits against non-debtors. ... The BAP treated the “unusual circumstances” doctrine and the usual preliminary injunction standard as separate and distinct bases for affirming the stay. That is error, because the “unusual circumstances” doctrine does not negate the traditional preliminary injunction standard.

Section 362(a)'s automatic stay generally does not apply to proceedings against nondebtors, and the unusual-circumstances doctrine does not dispense with the usual preliminary injunction standard for extending a stay to them.

Solidus Networks v. Excel Innovations · filed 2007-09-07(a)

Moreover, we have consistently held that the automatic stay does not apply to suits against non-debtors. ... That is error, because the “unusual circumstances” doctrine does not negate the traditional preliminary injunction standard.

A Maryland trial court may extend the section 362(a)(1) stay to a non-bankrupt co-defendant only after the debtor obtains a stay order from the bankruptcy court administering the debtor’s estate.

Alvarez v. Bateson · filed 2007-09-13(a)(1)

Therefore, we hold that a trial court in Maryland cannot grant a stay of a judicial proceeding, under the automatic stay provision of 11 U.S.C. § 362, as to a non-bankrupt co-defendant of a debtor without a prior order granting such a stay from the bankruptcy court administering the debtor’s estate. ... Applying our holding to the instant case, it is clear that Bateson Construction, as the debtor, was the only party that could have filed for an extension of the section 362 stay to appellees. Moreover, such a stay could only be granted by the bankruptcy court administering Bateson Construction’s estate.

An individual chapter 13 debtor's automatic stay does not extend to a wholly owned LLC merely because collection actions against the LLC may affect the debtor's employment and ability to reorganize.

In Re McCormick · filed 2008-02-08(a)

The Court understands that Debtor is employed by the LLC, and any action against the LLC may impact his “employment” and ultimately his ability to reorganize under chapter 13. The Court does not find this argument persuasive. ... Based on the forgoing, after a careful review of the totality of the circumstances presented, Debtor’s Application to extend the automatic stay afforded him under 11 U.S.C. § 362 to his limited liability company is denied.

Section 362(a)(1) does not extend the automatic stay to nondebtor defendants merely because alter ego or joint venture theories could make the debtor liable for a judgment against them.

Dixie Aire Title Services, Inc. v. SPW, L.L.C. · filed 2008-04-24(a)(1)

By its terms, however, § 362(a)(1) only stays an “action or proceeding against the debtor.” ... Alter ego liability would only arise after proof of the necessary elements for that type of liability. The same is true with respect to joint and several liability which arises upon proof of the elements of a joint venture. Thus, a judgment against the movants based on any liability for fraud, fraudulent inducement or breach of contract, is not, “in effect,” a judgment against Jet Network, L.L.C. ... The movants have not shown cause to expand the stay, and the motion is DENIED.

Section 362(a)'s automatic stay may extend to nondebtor owners and secured creditors whose close relationship with the debtors means litigation against them will significantly affect the protected debtors.

Bridges v. ContinentalAFA Dispensing Co. (In Re ContinentalAFA Dispensing Co.) · filed 2009-03-27(a)

Here, CAFA is wholly owned by Defendants. CAFA owns all of the common stock of the other Debtors, AFA and CSI. Additionally, Defendants are secured creditors with a second lien on substantially all of Debtors’ assets. Thus, any action taken against Defendants will significantly affect Debtors who are protected under the automatic stay. Therefore, the filing of the Complaint is a violation of the automatic stay and the automatic stay should be extended to Defendants as to Plaintiffs claims against Defendants.

Section 362(a)(1) may protect nondebtors in unusual circumstances, including when their interests are identical to the debtor’s or their litigation would impair the debtor’s reorganization.

In Re Philadelphia Newspapers, LLC · filed 2009-07-02(a)(1)

Here, the “unusual circumstances” to warrant the extension of the section 362(a) stay are present. As detailed above, (1) because the Debtors owe potential contractual and common law duties to indemnify the Non-Debtors, the interests of the Debtors and Non-Debtors in the state action are identical, and (2) the diversion of resources caused by the state action against the Non-Debtors will impact the Debtors’ ability to engage in timely and effective reorganization.

Section 362(a) does not stay a proceeding against nondebtor parties when the debtor is not involved.

Winters v. Dowdall · filed 2009-06-30(a)

...the automatic stay provision only applies to those proceedings which would involve the debtor AEG, or its parent 1031 Tax Group LLC, neither of which is a party to this action (see 11 USC § 362 [a]; Teachers Ins. & Annuity Assn. of Am. v Butler, 803 F2d 61, 65 [2d Cir 1986]).

Section 362(a) does not stay independent wage claims against nondebtor corporate managers when the claims do not affect the bankruptcy estate.

Boucher v. Shaw · filed 2009-07-27(a)

To the contrary, the managers are independently liable under the FLSA, and the automatic stay has no effect on that liability.

Section 362(a)(1) does not protect nondebtor defendants from an adversary proceeding.

Bruno v. Mona Lisa at Celebration, LLC (In Re Mona Lisa at Celebration, LLC) · filed 2009-08-12(a)(1)

Here, the plaintiffs have filed ten-count complaints against four defendants, three of whom are not debtors and who are not protected by the automatic stay.

Section 362(a)’s automatic stay may extend to a nondebtor employee when unusual circumstances, including potential indemnification and interference with the debtor’s reorganization, justify the extension.

Lane v. Philadelphia Newspapers, LLC (In Re Philadelphia Newspapers, LLC) · filed 2010-01-11(a)

In Philadelphia Newspapers II, this Court found that “unusual circumstances” existed to justify extension of the automatic stay for two reasons: (1) the Debtors owed potential indemnification obligations to their employees involved in state court litigation, such that the interests of the Debtors and their employees were identical; and (2) the diversion of resources involved with defending the pending state court litigation would divert the Debtors’ resources and adversely impact the Debtors’ attempted reorganization. ... As the same circumstances exist with respect to the Lane Action, the Court holds that the Bankruptcy Court’s finding that sufficient “unusual circumstances” existed to justify extension of section 362(a) to Gross was not clearly erroneous.

Section 362’s automatic stay does not toll the time to sue a party other than the debtor.

Corbett v. FIRSTLINE SECURITY, INC. · filed 2009-12-09

However, the automatic stay and Rule 204(a) do not toll actions against parties other than the debtor, and thus do not toll actions against ADT.

Section 362(a) generally stays actions against the debtor alone; courts may extend the stay to nonbankrupt codefendants only in unusual circumstances.

Puig v. PADC MARKETING, LLC · filed 2009-12-23(a)

We read the A.H. Robins decision as authorizing courts to extend the automatic stay to non-bankrupt co-defendants only in “unusual circumstances.”

Section 362(a) extends the automatic stay to a nondebtor based on the debtor’s indemnification obligation only when that obligation is absolute.

Forcine Concrete & Construction Co. v. Manning Equipment Sales & Service · filed 2010-03-16(a)

This fact is crucial, because the stay is applied to third parties only where the debtor’s “indemnification obligations” are “absolute.”

Section 362’s automatic stay protects the debtor but does not extend to nonbankrupt codefendants facing independent claims.

Twist v. Roel "Robie" Flores · filed 2010-05-13

Stays pursuant to 11 U.S.C. § 362 are limited to the debtor and do not encompass non-bankrupt co-defendants.

Section 362 extends the automatic stay to claims against a nondebtor only when an actual identity of interests means a judgment against the nondebtor would in effect be a judgment against the debtor; identical allegations alone are insufficient.

Beran v. WORLD TELEMETRY, INC. · filed 2010-09-30

Under these cases, the presence of identical allegations against the debtor and nondebtor defendants are an insufficient ground to extend the stay to the nondebtors. There must be an actual, as opposed to an alleged or potential, identity of interests, such that a judgment against the nonbankrupt parties would in fact be a judgment against the bankrupt party.

Section 362(a) ordinarily does not stay proceedings against a third party merely because its owner has filed for bankruptcy.

Payless Car Rental System, Inc. v. Elkik · filed 2010-10-07(a)

The automatic stay provisions, however, do not ordinarily extend to a third party, such as the remaining appellee, PRG.

Section 362(a) can protect a nondebtor when unusual circumstances make a proceeding against it essentially a proceeding against the debtor.

In Re R & G Financial Corp. · filed 2010-11-18(a)

In the instant case, the arbitration proceedings against RGIC are essentially and statutorily against the Debtor, given that their identity of interests are in essence merged into RGFC, as its sole stockholder, and as the real party in interest RGFC will have to prepare and incur all legal defense fees and may ultimately be liable depending on the outcome of the FINRA claimants claims. Thus, the “unusual circumstances” to extend the protection of the automatic stay pursuant to Section 362(a) are present.

Section 362(a)(1) stays proceedings against the debtor, but its protection does not extend to co-defendants or prevent severance of claims against them.

Hamel-Schwulst v. Country Place Mortgage, Ltd · filed 2010-12-30(a)(1)

However, it is well-established that the protections of § 362 neither apply to co-defendants nor preclude severance.”

Section 362(a)'s automatic stay may extend to nondebtor third parties when protecting them is essential to the debtor's reorganization.

Union Trust Philadelphia, LLC v. Singer Equipment Co. (In Re Union Trust Philadelphia, LLC) · filed 2011-11-03(a)

However, where “unusual circumstances” exist, the § 362(a) automatic stay may be extended to non-debtor third parties. ... In this case, at a minimum, the second situation is present. ... Therefore, the court’s extension of the automatic stay to Grasso and Miller was proper.

Section 362(a) does not extend an individual debtor’s automatic stay to a separate corporation or bar collection actions against the debtor in his capacity as its officer absent unusual circumstances justifying an extension.

Slabicki v. Gleason · filed 2012-02-03(a)

Therefore, the bankruptcy court did not err in concluding that the automatic stay of Slabicki’s personal bankruptcy case did not extend to BECR, a non-debtor corporation, nor did it prohibit actions taken against Slabicki in his capacity as a corporate officer.

Section 362(a)'s automatic stay does not bar foreclosure of a lien on a nondebtor's property when the proceeding does not affect the debtor's property.

KM Upstream, LLC v. Elkhorn Construction, Inc. · filed 2012-06-06(a)

Because the property subject to the lien foreclosure was the property of KM, rather than the property of Newpoint, the entity in bankruptcy, the in rem proceeding to foreclose the lien was not subject to the automatic stay.

Section 362 ordinarily stays proceedings against the bankruptcy debtor, and an appeal involving a nondebtor must also halt when deciding that party’s claims would necessarily decide the debtor’s intertwined claims.

Gmac Mortgage, LLC v. Bree · filed 2012-06-20(a)(1)

Ordinarily, parties other than GMAC are not entitled to the protection of the automatic stay under §362. ... Thus any decision as to F&M must necessarily involve a decision as to the merits of GMAC’s contentions, which we may not make.

Section 362 generally protects only the debtor, but an appeal against a nondebtor may have to await the lifting of the stay when deciding it would necessarily decide the debtor’s contentions.

Farmers & Merchants Bank v. Bree · filed 2012-06-20(a)(1)

Ordinarily, parties other than GMAC are not entitled to the protection of the automatic stay under §362. ... In contrast, here the rights and obligations of F&M are intertwined with and dependent upon those of GMAC, as they arise in large part from GMAC’s loan documents. Moreover, the Brees allege that GMAC and F&M conspired together to deprive them of their property. Thus any decision as to F&M must necessarily involve a decision as to the merits of GMAC’s contentions, which we may not make.

Section 362(a) ordinarily does not extend the automatic stay from a debtor who files for bankruptcy to that debtor’s codebtors, guarantors, or sureties.

Peerles Oil & Chemical, Inc. v. Hermanos Torres Pérez, Inc. · filed 2012-07-13(a)

Por consiguiente, cuando en un pleito hay varios codeudores, garantizadores o fiadores, estos no se pueden amparar en la quiebra de uno de los deudores para alegar también la paralización del proceso en su contra.

Section 362(a)(6) does not bar collection of a nondebtor’s debt when the funds used are not shown to belong to the debtor’s estate.

TLB Equipment, LLC v. Quality Car & Truck Leasing, Inc. (In re TLB Equipment, LLC) · filed 2012-09-28(a)(6)

As the Court found above, the parties to the Liability Premium Finance Agreement were Quality and Belville Trucking; TLB was not a party to that agreement. Accordingly, the debt to which Quality applied funds was not TLB’s, but instead was the debt of Belville Trucking, which is not a bankruptcy debtor. Furthermore, no evidence was presented showing that the funds in question belonged to TLB—rather than Belville Trucking—and thus were property of TLB’s bankruptcy estate. The Court, therefore, concludes that TLB failed to establish that Quality violated the automatic stay when it applied the funds it received from Rosemount to Quality’s claim against Belville Trucking.

Section 362’s automatic stay in a Chapter 7 case does not protect a nondebtor spouse’s interest in property merely because the spouse co-owns the property and is a co-debtor on the note.

Ronald Alan Brown v. · filed 2014-03-17

Though Tonya Brown may be a co-debtor under the Note and may be a co-owner of the Real Property, there is no co-debtor automatic stay in Chapter 7 cases. The Stay Relief Order thus did nothing to affect Tonya Brown’s rights, because there was never any stay in place with regards to her interest in the Real Property.

Section 362(a)(1) can stay a motion against a nondebtor when the debtor is effectively required to indemnify that party for the resulting costs; action on the motion during the stay is void.

Equity One, Inc. v. Shivers · filed 2014-06-10(a)(1)

The inquiry does not end, however, with the determi- nation that the motion for fees and expenses did not directly affect the defendant debtor. Courts have extended the application of automatic stay to nondebt- ors in ‘‘unusual circumstances’’ where doing so would further the purpose behind the stay. ... In the present case, the defendant in effect was obli- gated by statute to indemnify the plaintiff. ... Because the stay in the present case was applicable to the motion for committee fees, the action regarding that motion is void.

Section 362(a)’s automatic stay does not protect a nondebtor defendant unless the claim against it would have an immediate adverse economic consequence for the debtor’s estate.

Bankdirect Capital Fin. v. Insurance Co. of State of PA · filed 2014-08-20(a)

ISOP failed to demonstrate that Bankdirect’s claim against it would have an “immediate adverse economic consequence” for Emivest’s estate (Ritchie Capital Mgt., L.L.C. v Jeffries, 653 F3d at 763). Thus, it was not entitled to the protection of the automatic stay pursuant to 11 USC § 362 (a).

Section 362(a)(1) does not stay creditors’ claims against nondebtors based on duties those defendants owed directly to the creditors, even when the claims share facts with the trustee’s fraudulent transfer claims.

Picard v. Fairfield Greenwich Ltd. · filed 2014-08-08(a)(1)

These independent duties distinguish the Actions from the Trustee’s own claims and place them — like the fraud claims in Cumberland — outside the scope of the automatic stay.

Section 362’s automatic stay generally does not cover claims against nondebtor third parties; a party seeking to extend the stay must provide evidence connecting those parties to the debtor.

HORTON v. HAMILTON · filed 2015-02-10

While the United States Code does establish an automatic stay and time extensions for the debtor filing for bankruptcy protection, 19 Horton fails to demonstrate how the automatic stay mandated by Section 362 of Title 11 of the United States Code prevented her from bringing suit in the state district court. United States circuit courts of appeals have recognized a limited exception to the general rule that a bankruptcy stay is inapplicable to claims against non-debtor third parties, 20 but we have no facts in the evidentiary material that establish even a limited connection between Life Fund 5.1, L.L.C. and the defendants. Therefore, we reject Horton's argument here because she failed to provide any evidentiary material to support her position, but she is free to pursue it in the district court.

Section 362(a) does not automatically protect a nondebtor LLC from a creditor’s judgment and foreclosure; a debtor seeking that protection must affirmatively request an injunction extending the stay.

In re Hart · filed 2015-03-04(a)

In this case, the Court holds that, in order for the Debtor to have obtained the protections of the automatic stay under § 362(a) to stay' M & T’s confession of judgment action against JT & T and the. foreclosure of the LLC Real Property, she needed to affirmatively request such relief by filing an adversary complaint seeking an injunction under § 105(a) to extend the automatic stay to the proceedings against JT & T.

Section 362(a) does not stay collection against a corporate debtor’s officer who is independently liable for a trust fund recovery penalty.

Riggs v. Comm'r · filed 2015-05-26(a)

Therefore, because 11 U.S.C. sec. 362(a) does not apply to petitioner, respondent’s collection action was not subject to a bankruptcy stay.

Section 362(a) extends the automatic stay to a nondebtor only when an actual identity of interests means a judgment against the nondebtor would effectively be a judgment against the debtor; identical allegations alone are insufficient.

In re Divine Ripe, L.L.C. · filed 2015-09-23(a)

There must be an actual, as opposed to an alleged or potential, identity of interests, such that a judgment against the non-bankrupt party would in fact be a judgment against the bankrupt party. The individual defendant Jimenez has not demonstrated such a relationship and has not carried his burden to demonstrate that the § 362 stay may be extended to him.

Section 362(a) ordinarily does not stay claims against non-debtor defendants, and a bankruptcy court must order any extension of the stay to them.

Totten v. Kellogg Brown & Root, LLC · filed 2016-01-22(a)

In any event, the bankruptcy of one defendant does not normally stay the case as to non-debtor defendants absent unusual circumstances. ... In the absence of a bankruptcy court order extending the automatic stay to the non-debtor in this action, this case will go forward as to Defendant KBR.

Section 362(a)(1) can stay a suit against a nondebtor when liability against that defendant would effectively establish a debtor’s liability or trigger a debtor’s indemnity obligation.

Lone Wolfe Natural Resource Services Inc. v. Johnson · filed 2016-03-18(a)(1)

But a narrow exception expands the application of an automatic stay to cases involving “unusual circumstances.” ... Accordingly, the court stays these proceedings pending resolution of Brooks Run’s and Maxxim’s bankruptcy proceedings.

Section 362(a)(1) does not extend the automatic stay to nondebtor defendants based solely on the possibility of future indemnification claims against the debtor.

New Jersey Carpenters Health Fund v. Royal Bank of Scotland Group, PLC · filed 2016-09-02(a)(1)

The mere possibility of a future indemnification claim will not support application of the automatic stay, and Defendants have not provided Second Circuit authority to the contrary.

Section 362 does not bar a creditor from pursuing a personal claim for a particularized injury against a third party, even if the debtor also has a claim against that party.

In re Sound View Elite Ltd. · filed 2017-03-27(a)(1)

Conversely, the automatic stay does not bar a creditor from pursuing individual or personal claims for particularized injury belonging to the creditor, even where the debtor may also have claims against the same third party.

A court may treat a motion to extend the § 362 stay to third-party litigation as a request for an injunction under § 105 when the requested relief is substantively identical.

In re Bailey Ridge Partners, LLC · filed 2017-05-16

Here, Debtor made its motion under § 362. Because the relief requested is substantively identical, however, the Court will follow In re Panther Mountain and treat Debtor’s motion to extend the stay as a motion to enjoin the subject lawsuits under § 105.

Section 362 does not automatically stay lawsuits against persons or entities that have not filed for bankruptcy; the bankruptcy court may extend the stay to them.

Nichols Nursery Inc. v. Lobdell · filed 2017-07-19

Second, with respect to Defendant Delaware Sports Complex, LLC’s Motion to Stay, the Court rejects Defendant Delaware Sports Complex, LLC’s contention that filing for bankruptcy requires a stay of lawsuits against non-debtor entities or persons. Furthermore, under the circumstances presented here, the Court declines to exercise its discretion to stay this action as to the individual Defendants pursuant to Superior Court Civil Rule 41(g). Instead, the Court will stay this action for 90 days to allow any persons who seek the protection of 11 U.S.C. § 362 to apply to the United States Bankruptcy Court for relief. After 90 days, the stay will be lifted and the action in this Court shall proceed against Defendants Scott Lobdell and Brian Ellis as long as the United States Bankruptcy Court does not extend the automatic stay to those persons.

Section 362(a)(1) stays proceedings against the bankruptcy debtor, but does not stay claims against a nondebtor codefendant.

Higgins v. Superior Court · filed 2017-09-28(a)(1)

As a matter of law, the automatic stay that applied to claims against debtor Powell did not apply to Cabandong's claims against nondebtor Higgins.

Section 362(a)(1) can extend the automatic stay to a non-debtor defendant when unusual circumstances make its liability derivative of the debtor’s liability.

Edwards v. McElliotts Trucking, LLC · filed 2017-11-17(a)(1)

As this case’s circumstances align most closely with those in the Dunnam case, the Court FINDS that Cardinal is entitled to the protection of the automatic stay prescribed in 11 U.S.C. § 362(a)(1) for the claim of vicarious liability asserted against it.

Section 362’s automatic stay does not protect a nondebtor entity merely because it is alleged to be the debtor’s alter ego.

Performance Food Group v. ARBA Care Center of Bloomington, LLC · filed 2017-12-15

Applying the above legal principles to the facts of the present case, we find that the ARBA entities were not the debtor for bankruptcy purposes and were not automatically protected by the bankruptcy stay, even though plaintiff alleged that the ARBA entities were the alter egos of the ASTA entities.

Section 362(a) automatically stays claims against the debtor, but the stay does not automatically extend to individual codefendants.

Wang v. Xinyi Liu, Yuanlong Huang, Zhaonan Wang, Bling Entm't, LLC · filed 2018-03-13(a)

As Yiming notes, however, the stay does not automatically extend to the Bling Defendants under Section 362.

Section 362(a)(1) does not bar judgment against separate corporate defendants merely because the debtor may own them, absent facts indicating that they are entitled to absolute indemnity from the debtor.

Pee Dee Elec. Membership Corp. v. King · filed 2018-03-15(a)(1)

Despite the fact that King may have an ownership interest in AccuKing or TriTech, because AccuKing and TriTech are separate legal entities from King, and because no facts indicate that AccuKing or TriTech are entitled to absolute indemnity from King, entry of default judgment against AccuKing and TriTech is not precluded by King’s bankruptcy.

Section 362(a)(1) does not automatically protect a nondebtor, though a bankruptcy court may extend the stay to a nondebtor under unusual circumstances.

Caples Land Company, L.L.C. v. the City of El Paso, Texas and Its Building and Standards Commission · filed 2018-04-06(a)(1)

Because Caples Land Company is not the debtor, the stay does not protect it. Under unusual circumstances, the bankruptcy court can extend the stay to a non-debtor entity, but the City of El Paso has not shown that such circumstances exist in this case. Further, such an extension of the stay is a matter which must be determined by the bankruptcy court.

The automatic stay extends to a nondebtor entity only upon a showing of unusual circumstances; sole ownership by the debtor does not make the extension automatic.

Nhi Reit of TX-IL, LLC v. Lasale Grp., Inc. · filed 2019-08-02(a)(1)

The burden of showing "unusual circumstances" to extend the automatic stay falls on the party seeking the extension. ... Defendants in this action have not carried their burden. They cite no cases where being a sole member of another entity makes extension of the stay appropriate, let alone automatic.