Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: Unanimous Court Applies "Plain Meaning" Approach in Bankruptcy Decision
The following is an excerpt:
Bankruptcy is not usually a subject that I would cover in this blog, but I write about the Supreme Court's unanimous decision today in City of Chicago v. Fulton for two reasons. The first is obvious in that, in these uncertain times, there is an unfortunate number of companies that are contemplating reorganization and others that, as a result, are taking steps to secure property that might affect the ultimate estate. Those who practice in the field should download a copy of the opinion and study its details.
The second reason pertains more to us lawyers who practice before the Court or who otherwise predict or determine its decisions and trends. The Fulton case involves the issue of whether a creditor, in this case the City of Chicago, violates the automatic stay provision of the U.S. Bankruptcy Code ("Code") when it refused to return various impounded vehicles that had been owned by four debtors who were subject to Chapter 13 of the Code. Reversing lower court rulings, a unanimous Court (Sotomayor, J., concurring, and Barrett, J., not participating), held that the mere retention of estate property after the filing of a bankruptcy petition does not violate 11 U.S.C. § 362(a)(3), which operates as a "stay" of "any act" to "exercise control" over the property of the estate. While Justice Sotomayor concurred because she questioned whether other provisions of the Code might apply in future cases, even she agreed that, as used in §362(a)(3), the phrase "exercise control over" does not cover a creditor's passive retention of property lawfully seized before bankruptcy and does not require the creditor to return the property upon the filing of a bankruptcy petition.
Click here to read the full post and more on SCOTUS Today.
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