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Margaret Kinney v. HSBC Bank USA

Summarizing by Lars Fuller

Michalski v. Coulson (In re Michalski)

No. 10-3654; 11-0872 (6th Cir., December 21, 2011)
In affirrming the lower courts' rulings, the Sixth Circuit first observed that courts are divided over whether the exception to the automatic stay of Section 362(b)(1) is absolute, or dependent on whether the primary motivation of the criminal proceeding is to collect a pre-petition debt. The Sixth Circuit then explained that while it had not yet addressed the issue, it need not do so in this case because the county prosecutor could not have violated the automatic stay when it brought new indictments against the Debtor, in light of the fact that upon the Debtor receiving a discharge the automatic stay was lifted and supplanted with the discharge order. Finding that there was insufficient evidence in the record to support the Debtor's contention that the county prosecutor's underlying motive was debt collection, the Sixth Circuit further held that the county prosecutor did not violate the automatic stay under either interpretation of Section 362(b).
Procedural context:
Debtor appealed from the Bankruptcy Appellate Panel's affirmance of the Bankruptcy Court's ruling that prosecutor had not violated automatic stay or discharge injunction. The Sixth Circuit affirmed the BAP's ruling.
Debtor issued several insufficient funds (NSF) checks pre-bankruptcy. The Debtor then filed a chapter 7 case, in which the creditors receiving NSF checks did not object to his discharge. The Debtor obtained a discharge and his case was closed. Subsequently, the county prosecutor, who previously had dismissed criminal complaints against the Debtor, brought renewed criminal charges based on the same NSF checks. The Debtor moved to reopen his chapter 7 case and requested an injunction prohibiting the county prosecutor from proceeding with the criminal case, and damages for civil contempt.
Guy, Kethledge, White

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