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Law School Case Brief

Prochnow v. Apex Props., Inc. (In re Prochnow) - 467 B.R. 656 (C.D. Ill. 2012)

Rule:

The weight of authority holds that recoupment does not violate the automatic stay in bankruptcy proceedings.

Facts:

In the course of bankruptcy petition proceedings of Realtor-Associate Prochnow, he asked that the bankruptcy case be reopened for the purpose of hearing his motion to hold real estate broker ReMax in contempt for violation of the automatic stay. The bankruptcy court denied the motion, and Realtor-Associate Prochnow appealed the decision to the district court.

Issue:

Does the broker’s retention of commission violate the automatic stay?

Answer:

No.

Conclusion:

The bankruptcy court properly denied a motion by a realtor-associate as debtor to hold a real estate broker in contempt for violation of the automatic stay. The real estate commission retained by the broker was part of bankruptcy estate because the debtor had a contingent interest in the commission when he filed his bankruptcy petition, and the broker's retention of the commission did not violate the automatic stay because it was in the nature of recoupment.

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