Adopting the minority view, a district judge in California decided that the automatic stay terminates automatically in 30 days as to the debtor and property of the estate, not just with respect to an individual whose prior bankruptcy was dismissed within a year.
District Judge Beth Labson Freeman of San Jose followed a 2011 Ninth Circuit Bankruptcy Appellate Panel opinion named In re Reswick, which she called “lengthy and well-reasoned.”
In the case of an individual whose prior bankruptcy was dismissed within a year of a new filing, Section 362(c)(3)(A) automatically terminates the stay in 30 days “with respect to the debtor.”
According to Judge Freeman’s Aug. 10 opinion, the majority of courts hold that the stay does not terminate automatically as to property of the estate. The majority, she said, draws an “unambiguous distinction between the debtor and the debtor’s property.”
The minority, including the Ninth Circuit B.A.P., believe the majority’s “plain meaning” argument is “reasonable,” but they see “other reasonable constructions,” Judge Freeman said. Given several possible interpretations, she concluded that the “plain meaning approach” does not resolve the matter.
Judge Freeman analyzed the 2005 BAPCPA amendments in Section 362 and the intention of Congress “to correct perceived abuses of the bankruptcy system.” She said it would be “inconsistent with this scheme of deterrence” if the stay with regard to a serial filer remained in effect with regard to estate property, “which as a practical matter usually consists of all significant assets.”
Judge Freeman therefore upheld the bankruptcy court which had ruled that the stay terminated automatically as to estate property as well.