Annulling The Automatic Stay: When Is Retroactive Relief Available?

In re Benchmark Capital, Inc., 490 B.R. 566 (Bankr. E.D. Tenn. 2013) –

Unbeknownst to a foreclosing creditor, the personal representative of the deceased sole shareholder of a corporation that had been administratively dissolved more than a decade ago filed a chapter 7 bankruptcy petition on behalf of the corporation three days before the foreclosure sale of real estate owned by the corporation.  After learning of the bankruptcy, the creditor sought to annul the automatic stay and retroactively validate the foreclosure sale.

Under 362 of the Bankruptcy Code, the automatic stay goes into effect automatically upon the filing of a bankruptcy petition.  As stated in several cases quoted by the bankruptcy court, its purpose is "to provide the debtor a 'breathing spell' from collection efforts and to shield individual creditors from the effects of a 'race to the courthouse,' thereby promoting the equal treatment of creditors."  Actions taken in violation of the stay