BANKRUPTCY-DEBTOR PROCEEDINGS-POWER OF COURT TO ENJOIN STATE COURT ACTIONS

Authors

Abstract

A debtor proceeding was initiated in a Florida federal court and an ancillary proceeding was begun in a New York federal court. The latter court enjoined petitioner, who had obtained a tort judgment against the debtor in a New York state court, which judgment had been affirmed by the Appellate Division, from arguing the case as appellee in the New York Court of Appeals and from continuing to prosecute an action commenced by him (petitioner) against the sureties on an appeal bond filed by the debtor pending the appeal to the Appellate Division. Shares of stock had been pledged by the debtor to indemnify the sureties on their undertaking. On motion to vacate the injunctions, held, that whether the petitioner's claim be regarded as dischargeable or not, the court could restrain him from proceeding with his state court actions under the broad definition of debt in section 74 (a) of the Bankruptcy Act, and by virtue of section 74 (m) which confers on the court in a debtor proceeding the powers invested in the bankruptcy courts by sections II (a) ¼ and 2 (15). The court added that if the petitioner be regarded as a secured creditor, due to the indemnification of the sureties, he could be restrained under section 74(n), which provides for staying the enforcement of rights of secured creditors. However, the order was revised in part to permit petitioner to argue his case in the Court of Appeals "in the interest of all parties." In re Collier, (D. C. S. D. N. Y. 1933) 4 F. Supp. 700.

Recommended Citation

BANKRUPTCY-DEBTOR PROCEEDINGS-POWER OF COURT TO ENJOIN STATE COURT ACTIONS, 32 Mich. L. Rev. 1158 (1934).
Available at: https://repository.law.umich.edu/mlr/vol32/iss8/12