Will an Adversary Proceeding Survive the Dismissal of the Bankruptcy Case? Maybe.

Eight years ago (8 years! You are reading a law blog that has lasted for 8 years!), I talked about the difference between a bankruptcy discharge and a dismissal.

The tl;dr version for creditors? Discharge is bad; dismissal is good.

But, what if you’re a creditor and the debtor has filed an adversary proceeding against you, but then the bankruptcy case is dismissed?

The tl;dr version? It depends.

Generally, the dismissal of the underlying bankruptcy case results in the dismissal of related adversary proceedings because federal jurisdiction is “premised upon the nexus between the underlying bankruptcy case and the related proceedings.” But, there are exceptions.

One such exception is for proceedings to enforce sanctions and contempt for violation of the automatic stay. A Bankruptcy Court will retain jurisdiction “for the purpose of vindicating the court’s own authority and to enforce its own orders.” See In re Bankston, 1:12-BK-14022-SDR, 2015 WL 6126440, at *2 (Bankr. E.D. Tenn. Oct. 15, 2015)

Basically, the reasoning goes, an action for contempt of court resulting from a party’s blatant disregard of the Bankruptcy Code and the authority of the Bankruptcy Court is something that the Bankruptcy Court takes very seriously and will enforce, independent of whether the underlying case still exists.

The reasoning is different for other types of proceedings that are dependent on the underlying case, like actions to recover avoidance preferences.

 

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Courts Revisit, and Affirm, Requirement of Possessory Bond in Eviction Appeals

Here’s a  quick reminder about appeals of detainer and eviction judgments in Tennessee.

Remember, a tenant who loses in General Sessions  has the right to appeal that detainer judgment. But, in order to retain the property, that tenant has to post a bond equal to one year’s rental value of the real property.

But, what if the tenant files an appeal and doesn’t post that giant bond (or otherwise find a dummy to sign off on the bond as surety)?

The Tennessee Supreme Court waded into these waters in an opinion from December 2013 and said that a detainer appeal without the “one year rent” bond is still an effective appeal, but it doesn’t help the defendant in any way in keeping the property.

Earlier in the summer, the Tennessee Court of Appeals issued another opinion on that issue. In that opinion, the Court noted that the appeal bond requirement to retain possession applies to appeals as noted under Tenn. Code Ann. § 29-18-130(b)(2), as well as petitions for writs of certiorari under Tenn. Code Ann. § 29-18-129.

This is an obscure part of the law, but lots of Courts are covering this ground and reaching the same conclusion.

Last note: If the tenant is only appealing the monetary part of the judgment, no possessory bond is needed to have an effective appeal.