Bank’s Enforcement Actions Against Non-Debtor’s Property Halted

Pacific Western Bank can’t pursue enforcement activity against a non-debtor’s interest in property he co-owns with a debtor, the U.S. District Court for the Central District of California held.

The automatic stay in bankruptcy extends to the non-debtor’s interest in the property because the bank’s actions would “inhibit the orderly distribution” of the bankruptcy estate, Judge André Birotte, Jr. wrote Jan. 8.

When a bankruptcy case is filed, an automatic stay prevents creditors from taking action against the property of the bankruptcy estate. This helps to “ensure orderly distribution of estate property in a way that will maximize the benefit ...