The Far-Reaching Implications Of High Court Ch. 13 Ruling

By Deborah Williamson, Jonathan Aberman and Nicholas Zugaro (January 22, 2021, 3:50 PM EST) -- In City of Chicago v. Fulton,[1] a unanimous U.S. Supreme Court[2] decided that the automatic stay imposed by Section 362 of the Bankruptcy Code does not require entities lawfully in possession of the debtor's property to immediately return that property upon the commencement of a bankruptcy case.[3]

Specifically, the court held that the mere retention of estate property after filing a bankruptcy petition does not violate the automatic stay against acts to obtain possession or exercise control of estate property under Section 362(a)(3).

Instead, the court held that the natural reading of the stay imposed by Section 362(a)(3) prohibits only affirmative...

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