Religion Law Quiz #36 (Bankruptcy Court Jurisdiction over Church Property)

True or False: If a debtor-religious organization transfers certain property (as part of its plan of reorganization) to another entity and there is subsequently a challenge as to who controls that new religious entity with the property, the Bankruptcy Court has subject matter jurisdiction to consider the dispute? 

 

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Answer: True.  This was the situation from a Oct. 2022 case from the Bankruptcy Court for the Southern District of New York.  Consider the following quote from that decision:

 

The Injunction, inter alia, prohibited Appellants from entering or remaining on the Property because the Property was rightfully owned by CRDI. Appellants held a meeting the same day the Injunction was issued wherein they purported to name themselves the trustees of CRDI, in a blatant attempt to undermine the effect of the Injunction. As the Bankruptcy Court aptly noted, “it's really transparent what happened here, which is that a light bulb went off in someone's head, and they said, hey we're losing on the property issue, so let's just say we're CRDI now.” (Tr. at 17:20-23). If Appellants prevailed in this case, then each of the Bankruptcy Court's prior orders prohibiting them from entering the Property would be of no effect and the Plan itself, which transferred the Property from Mosdos to CRDI would be subverted in all but name. Under these circumstances, the Bankruptcy Court clearly has subject matter jurisdiction to enforce and preserve its own orders. In re Texaco Inc., 182 B.R. 937, 947 (Bankr. S.D.N.Y. 1995) (“A bankruptcy court is undoubtedly the best qualified to interpret and enforce its own orders including those providing for discharge and injunction”).

 

The Bankruptcy Court had subject matter jurisdiction over this adversary proceeding. Its grant of summary judgment is, in that regard, affirmed.

 

Gewirtzman v. Markowitz, 646 B.R. 604, 612–13 (S.D.N.Y. 2022), aff'd sub nom. In re Mosdos Chofetz Chaim Inc., No. 22-2926, 2023 WL 6532954 (2d Cir. Oct. 6, 2023)

 

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.