477 B.R. 299
D. Conn.2012Background
- Toor and her husband executed a mortgage granting ESB a security interest in 8-10 Sunshine Avenue, Greenwich, Connecticut; original note principal was $1,360,000 and the loan has been in default since September 2008.
- Toor has filed bankruptcy four times since 2009, including a 2009 Chapter 7 (discharged April 2010), a 2010 Chapter 13 (dismissed October 2010), and a 2011 Chapter 11 (filed July 8, 2011 and dismissed by Toor’s motion June 14, 2011).
- ESB commenced foreclosure in Connecticut Superior Court; as of May 2, 2011, debt totaled $1,835,789.26 and the property’s fair market value was $1,040,000, with a law day set for July 12, 2011.
- Toor filed the instant Chapter 11 petition on July 8, 2011; she moved for an automatic stay on July 10, 2011; a July 26, 2011 hearing required an evidentiary hearing to determine good faith.
- An evidentiary hearing was held October 5, 2011; the bankruptcy court found by clear and convincing evidence that the petition was filed in good faith and granted a stay extended to all creditors under 11 U.S.C. § 362(c)(3)(B)/(c)(4).
- ESB appeals the retroactive timing of the stay and the good-faith determination; the district court affirmed the bankruptcy court’s order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court erred in finding Toor filed in good faith | Toor | ESB | Yes, Toor’s filing was in good faith |
| Whether the automatic stay was retroactive | Toor | ESB | Stay took effect on the written order date, not retroactive |
| Whether Connecticut law impacted the stay or title in state court | Toor | ESB | Court declined to decide, and did not rely on § 49-15(b) to resolve retroactivity or good faith |
| Whether the court correctly applied the clear-and-convincing standard for good faith under § 362(c)(4)(B) | Toor | ESB | Court properly applied clear-and-convincing standard and found good faith |
Key Cases Cited
- In re Barbieri, 199 F.3d 616 (2d Cir. 1999) (retroactivity and effectiveness of stay when not entered on docket)
- In re Koelbl, 751 F.2d 137 (2d Cir. 1984) (good faith requirement in bankruptcy filings under § 362(c)(4))
- In re Refco Inc., 505 F.3d 109 (2d Cir. 2007) (standard of review for bankruptcy court conclusions of law)
- In re Stoltz, 315 F.3d 80 (2d Cir. 2002) (findings of fact reviewed for clear error)