In re Herbst
United States Bankruptcy Court for the Western District of Wisconsin
469 B.R. 299 (2012)
- Written by John Reeves, JD
Facts
Jason Herbst (debtor) executed a security agreement for property with Talmer Bank & Trust (the bank) (creditor). The security agreement gave the bank a possessory interest in the property and provided that in the event of default the bank could repossess the property and sell it as a means of satisfying Herbst’s debt. Herbst defaulted on the security agreement, and the bank commenced judicial proceedings in state court to seize and sell the property. Pursuant to a state court order, the bank seized Herbst’s property and placed it with an auction house. After the bank seized the property, but before it was sold, Herbst filed for bankruptcy in federal court. This action commenced an automatic stay of all collection proceedings against Herbst as the debtor, including the bank’s repossession of the property. Despite this, the bank refused to return the property to Herbst’s bankruptcy estate. The bank maintained that because it had seized the property before Herbst filed for bankruptcy, the automatic stay did not apply to its seizure of the property, and consequently, it did not need to return the property to Herbst’s bankruptcy estate. Herbst filed a motion for a return of the property.
Rule of Law
Issue
Holding and Reasoning (Martin, J.)
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