The United States Bankruptcy Court for the Northern District of Illinois, just ruled on a case regarding a motion for relief from stay, but with a twist.
In almost every case, it’s the creditor who’s asking for relief from the automatic stay after a debtor files for bankruptcy protection. In this case, it’s the debtor who’s asking for relief from the stay. In re: Sweports, Ltd., 12 B 12454, involving a company that was forced into involuntary bankruptcy by three creditors concerned that the debtor was wasting away the assets of the business. The debtor was sued by a third party claimant seeking a declaratory judgment from the court stating that it was not infringing upon the debtor’s patent. The debtor felt that it would be vindicated in the suit, and wanted the case to proceed. However, the creditors of the debtor, the ones who filed the involuntary chapter 11 petition, successfully argued that proceeding with the case would further drain the already depleted assets of the debtor.
The court ruled in favor of the creditors, who had better standing to sue in this case.
Daniel Sugrue
Law Offices of Daniel J. Sugrue, Ltd.
281 Crescent Knoll
Green Oaks, IL 60048