Hon. Amul R. Thapar, a district judge in Covington, Kentucky, pointed out the significance of a split between the Sixth and Fifth Circuits on the effect of an order lifting the automatic stay by permitting a lawsuit to proceed.
A creditor filed a lawsuit not knowing that the defendant was in bankruptcy. After receiving notice of the stay, the creditor filed a motion to modify the stay. When the bankruptcy judge lifted the stay, the creditor filed a second suit in Judge Thapar’s court. The first-filed suit was removed to Judge Thapar’s court, alongside the second complaint.
Judge Thapar dismissed both.
In the Sixth Circuit, where Kentucky resides, a suit in violation of the stay must be dismissed, Judge Thapar said, absent “limited equitable circumstances.”
The creditor relied on the Fifth Circuit’s Sikes v. Global Marine Inc. for the proposition that the bankruptcy judge intended to validate the filing of the original complaint in modifying the stay. Judge Thapar said the Sixth Circuit considered and rejected Sikes, “to define the equitable exception more narrowly.”
Finding no equitable exception, Judge Thapar dismissed the first suit. He also dismissed the second suit because the statute of limitations had lapsed before it was filed. The creditor could not take advantage of Section 108(c)(2) because the second suit was filed more than 30 days after the stay was lifted.
Judge Thapar is the first South Asian to become an Article III judge. Born in Detroit, Judge Thapar was elevated to the bench in 2007.
Hon. Amul R. Thapar, a district judge in Covington, Kentucky, pointed out the significance of a split between the Sixth and Fifth Circuits on the effect of an order lifting the automatic stay by permitting a lawsuit to proceed.