- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 24-60377 (5th Circuit, Feb 25,2025) Not Published
- Tag(s):
-
- Ruling:
- With no clear error in the bankruptcy court’s findings, nor abuse of discretion, it was well within the court’s authority to grant the motion for retroactive annulment of the automatic stay, notwithstanding the fact that the foreclosure was a violation of the stay at that time.
- Procedural context:
- Appeal to the United States Court of Appeals for the Fifth Circuit, from the United States District Court for the Southern District of Mississippi, which affirmed the bankruptcy court’s retroactive annulment of the automatic stay.
- Facts:
- Secured creditor, PriorityOne Bank, pursued foreclosure proceedings pursuant to a commercial promissory note in violation of the automatic stay, upon its mistaken belief that the stay had terminated by operation of law.
Appellant, Dr. Ikechukwu H. Okorie, (the chapter 7 debtor) filed an objection to PriorityOne's proof of claim and simultaneously moved for damages pursuant to section 362(k) of the Bankruptcy Code, arguing that the foreclosure sale constituted a willful violation of the automatic stay.
PriorityOne cross-moved for an order terminating the automatic stay nunc pro tunc and, or alternatively, for annulment of the stay to April 17, 2019—the date when PriorityOne’s counsel and Dr. Okorie’s then-attorney exchanged emails sharing their view that the stay had terminated.
The Bankruptcy Court held that due to the lack of adequate protection for the creditor's interests and the debtor’s failure to demonstrate equity or the necessity of the property for effective reorganization, it was proper to annul the stay under both § 362(d)(1) and § 362(d)(2), notwithstanding the fact that PriorityOne foreclosed on the property without obtaining relief from the stay.
The district court found that the bankruptcy court did not abuse its discretion by retroactively annulling the automatic stay, and concluded that there was no clear error in the bankruptcy court’s factual findings that warranted annulment.
- Judge(s):
- Judge Priscilla Richman; Judge Jerry Willett; and Judge Dana M. Douglas; Per Curiam:
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