On January 14, 2021, the Supreme Court held in City of Chicago v. Fulton that a creditor does not violate the automatic stay by merely retaining possession of the debtor’s property after a bankruptcy filing. The City of Chicago routinely impounded vehicles owned by drivers with outstanding parking tickets and other fines. The City refused to release the impounded vehicles after the owner of the vehicle filed bankruptcy. The Court of Appeals for the Seventh Circuit held that the City’s retention of the vehicles violated the automatic stay.

A Chicago bankruptcy court recently ruled in In re Hitz Restaurant Group that a debtor’s obligation to pay rent during its bankruptcy case may be temporarily reduced because of a force majeure clause in the lease and the governor’s COVID-19 stay-at-home order. Both landlords and tenants should be aware that this rent reduction was carefully crafted and was not unlimited by the court.

Congress just made it easier and less expensive for small businesses to reorganize under Chapter 11. Small businesses continue to struggle under the current social isolation measures in place in most states. Even with the recent financial relief package passed by Congress, many small businesses will not have sufficient resources to meet their most basic obligations such as rent, utilities and other operational necessities.

In a recent opinion, the Court of Appeals for the Seventh Circuit ruled the City of Chicago must return repossessed and impounded vehicles upon receiving a bankruptcy petition, or run the risk of violating the automatic stay under Section 362 of the Bankruptcy Code.

Background

The U.S. Court of Appeals for the Seventh Circuit allowed a secured creditor to retain its lien and therefore the proceeds from a sale, even after the secured creditor mistakenly released its mortgage lien. The case is Trinity 83 Development, LLC v. ColFin Midwest Funding, LLC (In re Trinity Development, LLC), slip. op. (7th Cir. March 1, 2019).

"In God we trust. All others must bring data.” — W. Edwards Deming

With data being the new “coin of the realm,” those who control and exploit data have a winning advantage over competitors. This piece focuses on control of data in the unique situation of a cloud hosting provider’s bankruptcy.