By: Michael L. Moskowitz and Melissa A. Guseynov  

SCOTUS ALERT: Supreme Court Holds that Retention of Property Does Not Violate Automatic Stay  by Michael MoskowitzIn a recent opinion of interest to creditors and debtors alike, on January 14, 2021, the Supreme Court held that passive retention of a debtor’s property does not violate the automatic stay. City of Chicago v. Fulton, Case No. 19-357 (Sup. Ct. Jan. 14, 2021). Read the full opinion here

When a debtor files for bankruptcy protection, section 362(a)(3) of the Bankruptcy Code operates to “stay” efforts of creditors to collect from a debtor outside of bankruptcy, with certain limited exceptions. If a creditor willfully violates the automatic stay and there is injury to a debtor, section 362(k) of the Code states that the injured party may recover “actual damages, including costs and attorneys’ fees, and in appropriate circumstances, may recover punitive damages.”