by Daniel J. Weiner
In this Emerging Issues
Analysis, Daniel J. Weiner examines the treatment of the automatic stay in
partnership bankruptcies, including the treatment of stay actions against
non-debtor general partners by courts relying upon the automatic stay
provisions under Bankruptcy Code section 362 or the equitable powers under
section 105(a) and the treatment of stay actions against the partnership when a
general partner is a debtor.
In partnership bankruptcies,
courts have relied on several provisions of the Code to extend the protection
of the automatic stay to the assets of non-debtor general partners. Some courts
have relied on section 362(a)(3) which prohibits "any act to obtain
possession of property of the estate or property from the estate or to exercise
control over property of the estate" to prevent creditor actions against
the general partners of a debtor partnership. Others have relied on 11 U.S.C. §
362(a)(1) which stays an "action or proceeding against the debtor that was
or could have been commenced before the commencement of the case under this title,
or to recover a claim against the debtor that arose before the commencement of
the case under this title... ." And still other courts have relied on Code
section 105(a) as the statutory basis to enjoin proceedings or actions against
non-debtors where such actions would interfere with, deplete or adversely
affect property of the estate, frustrate the statutory scheme embodied in
Chapter 11 or impair the debtor's ability to reorganize.
The Supreme Court's opinion in United States v. Whiting Pools, Inc., is
based on a broad interpretation of what property is included in the
"property of the estate" as defined by section 541(a)(1). As a result
of the broad interpretations of what is considered property of the estate under
the Bankruptcy Code, it is arguable that a general partner's property would be
considered property of the partnership estate. Accordingly, it is important to
understand whether the automatic stay provision of the Bankruptcy Code would
extend to actions by the partnership's creditor(s) against the general partner as
well as whether the converse is true.
This article examines the treatment of stay actions against non-debtor general
partners by courts relying upon the automatic stay provisions under Bankruptcy
Code section 362 or the equitable powers under section 105(a) and the treatment
of stay actions against the partnership when a general partner is a debtor.
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J. Weiner is a founding partner of Schafer &
Weiner, PLLC located in Bloomfield Hills, Michigan. He graduated with a B.A. in
Philosophy with high honors from the Honors College of Michigan State
University in 1977 and received Phi Beta Kappa and Phi Kappa Phi distinctions.
Mr. Weiner earned his J.D. from Hofstra University School of Law, graduating
with special litigation awards and was selected to Hofstra's National Trial
Advocacy Team in 1980. Mr. Weiner was also admitted to the Florida Bar in 1983.
Mr. Weiner has served as a visiting lecturer on bankruptcy, debtor/creditor and
other commercial topics in the United States and Canada and has co-authored Swords
and Shields--Prepayment Premiums In and Out of Bankruptcy, The Michigan
Business Law Journal, Fall 2003. He is the contributing author of chapter 20,
"Partnership and Partner Bankruptcies" of the Collier Bankruptcy
Practice Guide (LexisNexis Matthew Bender). He is also an active member of
the Mediation Panel of the United States Bankruptcy Court for Michigan's