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May 6, 2020

Supreme Court Delays Decision to Next Year on Whether Automatic Stay Requires a Creditor to Turn Over Repossessed Property Without a Turnover Action

By: Dennis LeVine

The refrain from sports fans in most cities is “wait ‘til next year.” Bankruptcy lawyers and lenders now will have to wait to find out what the Supreme Court will rule on whether a repossessed vehicle must be returned to the debtor after a bankruptcy filing.

The Supreme Court postponed oral argument in City of Chicago v. Fulton (set for April 20, 2020) until the new term to begin in October 2020. The Supreme Court ceased holding oral arguments in March in the wake of the coronavirus.  Several significant cases were reset for oral arguments by video hookup, but not Fulton. In Fulton, the Seventh Circuit found that the City of Chicago violated the automatic stay by refusing to turn over cars automatically that had been impounded for unpaid parking fines when a bankruptcy case is filed.  As indicated in my recent E-Newsletter, there is a split in the Circuits on whether the automatic stay under Section 362 imposes an affirmative duty on creditors to immediately turn over repossessed property after a filing, or whether simply holding property is not an affirmative act and therefore not a stay violation.

Once the Supreme Court decides this case we will update you. Stay tuned!




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