On January 14, 2021 the Supreme Court decided City of Chicago, Illinois v. Fulton. The question presented was whether an entity that is passively retaining possession of property in which a bankruptcy estate has an interest has an affirmative obligation under the Bankruptcy Code’s automatic stay, 11 U.S.C § 362, to return that property to the debtor or trustee immediately upon the filing of the bankruptcy petition. The debtors believe that a different provision of the code, obligated the city to return the cars as soon as they filed for bankruptcy relief. The bankruptcy court agreed, and later, the 7th Circuit affirmed that ruling. By a vote of 8-0, the Supreme Court vacated and remanded. Writing for the Court, Samuel Alito indicated that “the mere retention of estate property after the filing of a bankruptcy petition does not violate §362(a)(3) of the Bankruptcy Code.”
Justice Alito’s opinion was joined by all other members of the Court except Justice Barrett, who took no part in the consideration or decision of the case. Justice Sotomayor filed a concurring opinion.
Ralph Brubaker, Carl L. Vacketta Professor of Law at University of Illinois’s College of Law, joins us today to discuss this ruling.