NORTHERN DISTRICT OF INDIANA | Key Points
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The Northern District of Indiana recently provided its interpretation of the limits on the bankruptcy stay provision codified at 11 U.S.C. § 362(c)(3)(A). First Financial Bank v. Clark, Case No. 2:18-cv-390 DRL (N.D. Ind. March 19, 2021). Courts are split on the scope of § 362(c)(3)(A).
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In its analysis, the Court focused much of its attention on the phrase “with respect to the debtor” in § 362(c)(3)(A) noting that “Congress knows full well the difference between the debtor and the estate…” The Court added if Congress intended the stay to terminate as to the estate property, Congress could have added “and the property of the estate” to § 362(c)(3)(A) as it did multiple times in § 362(a)…” Comparatively, the Court found the minority opinion “effectively invites the court to read “shall terminate with respect to the debtor” the same as “shall terminate,” treating the later part of the phrase as superfluous. The Court noted an interpretation that renders words and phrases superfluous was to be avoided in statutory construction.
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The Northern District adopted the majority view that § 362(c)(3)(A) only terminated the stay of actions against the debtor and his property; the stay remained in effect as to the property of the bankruptcy estate, including Clark’s real property. The Court affirmed the bankruptcy court.
