535 B.R. 629
Bankr. S.D.N.Y.2015Background
- Debtor filed a chapter 11 and sought to enforce the automatic stay against Bais Chinuch and others who invoked a beis din against the Debtor's principals.
- Beis din issued hazmanas and an ekul against the Debtor's principals to halt the adversary proceeding, threatening a sirov (communal shunning).
- Debtor warned that the beis din actions violated the automatic stay and voided the ekul, but the beis din continued activity.
- Beis din proceedings and threats imposed pressure on Debtor's principals and affected the Debtor's ability to participate in the case and operate its estate.
- Court held the automatic stay extends to actions aimed at the Debtor through its principals and that the ekul and beis din rulings were void ab initio.
- Court also addressed First Amendment defenses, and imposed coercive sanctions pending further proceedings on damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the automatic stay extend to beis din actions against the Debtor through its principals? | Debtor (through its principals) is protected by stay | Beis din actions targeted at principals are not stay violations | Yes; stay extends to protect the Debtor via its principals |
| Are the beis din ekul and beis din proceedings void ab initio due to stay violation? | Ekul and beis din proceedings violated stay and are void | Beis din actions were not properly within stay scope | Yes; ekul and rulings are void ab initio |
| What damages may be awarded for stay violations and should coercive sanctions be imposed? | Ask for actual and punitive damages plus coercive sanctions | Argue limited or no damages and no coercive sanctions | Actual damages may be awarded; coercive sanctions warranted to ensure future compliance |
| Does the Free Exercise/Establishment Clause bar enforcement of the stay against religious tribunals? | Enforcement could burden religious practice | RFRA does not apply; neutral and generally applicable law governs | Enforcement does not violate Free Exercise or Establishment Clause |
| Should the court issue an anti-suit injunction or other relief regarding the beis din? | Court must protect its jurisdiction and estate | Caution against overly broad inter-tribunal relief | Court may impose coercive sanctions; no broad anti-suit injunction against the beis din itself |
Key Cases Cited
- Picard v. Fairfield Greenwich Ltd., 762 F.3d 199 (2d Cir. 2014) (stay central to bankruptcy process; actions in violation are void)
- Crysen/Montenay Energy Co., 902 F.2d 1098 (2d Cir. 1990) (neutral, generally applicable law; avoid self-help; stay violations barred)
- In re Ionosphere Clubs, Inc., 171 B.R. 18 (S.D.N.Y. 1994) (contempt and coercive sanctions power for stay violations)
- In re Chateaugay Corp., 920 F.2d 633 (2d Cir. 1990) (contempt and sanctions authority in stay context)
- Queenie, Ltd. v. Nygard Int'l, 321 F.3d 282 (2d Cir. 2003) (automatic stay applies to protect debtor and estate; stay as barrier to action)
- In re 48th St. Steakhouse, Inc., 835 F.2d 427 (2d Cir. 1987) (actions in violation of the stay are void and without effect)