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AUTOMATIC STAY

City of Chicago, Illinois v. Fulton

Issues

After a debtor files for bankruptcy, is a creditor required to turn over property of the bankruptcy estate to the debtor or trustee under the Bankruptcy Code’s automatic stay provision if the creditor lawfully possessed the property before bankruptcy was initiated and only passively possesses the property afterwards?

This case asks the U.S. Supreme Court to determine whether an entity that passively possesses a debtor’s property must turn over that property to the bankruptcy estate under the Bankruptcy Code’s automatic stay provision. Petitioner City of Chicago argues that the automatic stay provision requires debtors and creditors to maintain the status quo as of the petition date, which, among other things, means that creditors cannot take actions to control property of the estate. Chicago maintains that passive possession does not constitute action. Further, Chicago asserts that because the automatic stay freezes the status quo, debtors must seek a court order compelling the turnover of property lawfully repossessed pre-petition. Respondents Robbin L. Fulton and others counter that the automatic stay language plainly requires that all the debtor’s property be transferred to the trustee or debtor and that passive retention is an act of restraint in violation of the automatic stay. Additionally, Fulton and others contend that the turnover duty is mandatory and does not require a court order. The outcome of this case has important implications on debtors’ and creditors’ bankruptcy rights, public safety, and the financial well-being of debtors and local governments.

Questions as Framed for the Court by the Parties

Whether an entity that is passively retaining possession of property in which a bankruptcy estate has an interest has an affirmative obligation under the Bankruptcy Code’s automatic stay, 11 U.S.C § 362, to return that property to the debtor or trustee immediately upon the filing of the bankruptcy petition.

In 2016, Petitioner City of Chicago (“Chicago”) amended its municipal code so that “[a]ny vehicle impounded by [Chicago] or its designee shall be subject to a possessory lien in favor of [Chicago] in the amount required to obtain release of the vehicle.” In Re Fulton at 920. Following this amendment, Chicago refused to return impounded vehicles to their owners if t

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Coinbase, Inc. v. Bielski

Issues

Is a district court deprived of jurisdiction to proceed with litigation pending appeal when a non-frivolous appeal is filed in response to a denial of a motion to compel arbitration?  

This case asks the Supreme Court to consider whether an appeal of an order denying a motion to compel arbitration automatically strips the district court of its jurisdiction to continue the litigation on the merits of the case pending the results of the appeal. The Third, Fourth, Seventh, Tenth, Eleventh and D.C. Circuits have all held that district courts are deprived of jurisdiction in this situation, while the Second, Fifth, and Ninth Circuits have held the opposite. Coinbase, Inc. argues that the “Divestiture Rule” applies here—the district court is divested of jurisdiction pending an appeal of a motion to compel arbitration. Abraham Bielski counters that the traditional discretionary test applies, which grants the district court the discretion to grant or deny a stay of the proceedings until the appeal is resolved. This case touches on important questions regarding judicial economy, economic efficiency, and the treatment of arbitration agreements in relation to other contracts.

Questions as Framed for the Court by the Parties

Whether a non-frivolous appeal of the denial of a motion to compel arbitration ousts a district court’s jurisdiction to proceed with litigation pending appeal.

Coinbase, Inc. (“Coinbase”) is a cryptocurrency exchange platform, which stores cryptocurrency for account holders in digital wallets. Bielski v. Coinbase, Inc. at 1. Abraham Bielski (“Bielski”) created an account with Coinbase and set up a digital wallet on the platform in 2021. Id. at 2.

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Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin

Issues

Does the Bankruptcy Code abrogate tribal sovereign immunity and thus subject Indigenous tribes to the Bankruptcy Code’s automatic stays enjoining debt collection, or do Indigenous tribes retain sovereign immunity against the Bankruptcy Code’s automatic stays?

Note: The authors mirror the parties’ and courts’ use of the terms “Indian” and “Indian tribe” as legal terms in this Preview.

This case asks the Supreme Court to decide whether the Bankruptcy Code unequivocally expresses congressional intent to abrogate the sovereign immunity of Indigenous tribes. The Lac du Flambeau Band of Lake Superior Chippewa Indians argues that the Bankruptcy Code’s language is unclear, ambiguous, and subject to reasonable alternative interpretations, which fails to meet the high bar of an unequivocal expression of Congress’s intent. Brian W. Coughlin counters that there is no requirement for an explicit reference to Indigenous tribes, and that the ordinary meaning of the word “governmental unit” clearly shows Congress’s intent to abrogate the sovereign immunity of Indigenous tribes. This case touches on essential questions regarding tribal self-governance and abuse of the system of sovereign immunity.

Questions as Framed for the Court by the Parties

Whether the Bankruptcy Code unequivocally expresses Congress’ intent to abrogate the sovereign immunity of Indigenous tribes.

Congress has authorized bankruptcy courts under 11 U.S.C. § 362(a) of the Bankruptcy Code (the “Code”) to enforce an automatic stay on debt collection efforts by creditors after the debtor has filed for bankruptcy.

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Ritzen Group, Inc. v. Jackson Masonry, LLC

Issues

Is an order denying a motion for relief from the automatic stay in a bankruptcy proceeding a final order—and thus immediately appealable—under 28 U.S.C. § 158(a)(1)?

This case asks the Supreme Court to decide whether, under 28 U.S.C. § 158(a)(1), an order denying a motion for relief from an automatic stay in a bankruptcy proceeding is a final order. Petitioner Ritzen Group, Inc. argues that an order denying stay relief is an interlocutory order—and thus not immediately appealable—because it merely affects the bankruptcy claims-adjudication process by determining where the parties can resolve underlying claims. Respondent Jackson Masonry, LLC argues that an order denying stay relief is final and subject to immediate appeal because proceedings deciding motions for stay relief are distinct from the overall bankruptcy proceeding and involve discrete claims, procedural standards, and legal standards. The outcome of this case will have implications on the judicial efficiency of bankruptcy litigation.

Questions as Framed for the Court by the Parties

Whether an order denying a motion for relief from the automatic stay is a final order under 28 U.S.C. § 158(a)(1).

On March 21, 2013, petitioner Ritzen Group, Inc. entered into a Real Estate Contract (“the Contract”) with respondent Jackson Masonry, LLC.

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