Quiz #65 (Religious Law Collides with the Bankruptcy Code's Automatic Stay)

Today's Religion Law Quiz is quite fascinating as it involves the intersection of religious practice and bankruptcy law (specifically, the automatic stay).  The following facts come from In re Congregation Birchos Yosef, 535 B.R. 629, 631–32 (Bankr. S.D.N.Y. 2015):

 

After filing this chapter 11 case, the Debtor commenced an adversary proceeding in this Court against Bais Chinuch L'Bonois, Inc. [(“Bais Chinuch”)] and the other subjects of the Motion asserting various claims for fraud, breach of fiduciary duty and looting of the Debtor's assets. Then Bais Chinuch and the other named defendants invoked a beis din, or Jewish religious court, specifically Beis Din Mecho L‘Hora‘ah, which (a) “invited,” or issued a hazmana to, the Debtor's principals, though not the Debtor itself, to participate in a beis din proceeding regarding the parties' dispute—i.e., the subject matter of the adversary proceeding—and (b), enjoined the Debtor's principals, through an ekul, from continuing to pursue the adversary proceeding in this Court. The hazmana, or summons, also warned the Debtor's principals that if they did not participate in the beis din proceeding they could be subject to a sirov, which the parties agree at a minimum constitutes a shunning by their religious community and potentially by all Orthodox Jews.

 

Question: Did Bais Chinuch and the other individuals violate the Bankruptcy Code's automatic stay by their action? 

 

(Scroll down for the answer)

 

Answer: The Court found that the automatic stay had been violated.  The Court noted "It is equally obvious, therefore, that Bais Chinuch and the individuals' invocation of the beis din proceeding—and the issuance of the beis din's ekul, or injunction—are actually directed at the Debtor through its principals with the intention of wresting control of the Debtor's adversary proceeding and exerting pressure to have it dismissed."  In re Congregation Birchos Yosef, 535 B.R. 629, 633 (Bankr. S.D.N.Y. 2015). 

 

The Court further stated:

 

The automatic stay is clearly neutral on its face and is also neutral and generally applicable, as far as religious exercise is concerned, in practice. It applies to anyone who falls within the ambit of 11 U.S.C. § 362(a) (here, to anyone who commences a proceeding or takes another action covered by either 11 U.S.C. § 362(a)(1) or (3)). It prohibits the invocation of all covered proceedings, whether in state or federal court, a foreign court, or a beis din.

 

In re Congregation Birchos Yosef, 535 B.R. 629, 637 (Bankr. S.D.N.Y. 2015)

 

 

Disclaimer: The Religion Law Quizzes are provided as a service to you. They are intended only for educational purposes. Nothing in the Quizzes is intended to be legal advice and they should not be relied upon as conclusive on any issue discussed therein.