In re: ALI A. SALEH, FATEMA A. SALEH, Debtors; ALI A. SALEH, ET AL., Plaintiffs v. BANK OF AMERICA, N.A., Defendant, 427 B.R. 415

Summary

One of the debtors was the sole shareholder of the non-debtor corporation, which continued to operate a small grocery store. The shareholder took out a line of credit. The creditor obtained a default judgment in state court against the corporation. The debtors argued that an injunction was necessary to prevent the creditor from pursuing collection actions against the corporation that could force the grocery store to cease operations and prevent the debtors from funding their Chapter 13 plan. The bankruptcy court determined that an injunction was not warranted because (1) under 11 U.S.C.S. §§ 362(a) and 524(e), the automatic stay and discharge injunction protections did not extend to the non-debtor corporation, (2) the court could not use 11 U.S.C.S. § 105(a) to fashion an injunction that would conflict with the limited scope of the Chapter 13 co-debtor stay in 11 U.S.C.S. § 1301, and (3) even if a § 105(a) injunction were possible, the debtors and the corporation did not share such an ...