"…I have…imposed coercive sanctions on Bais Chinuch and each of the individuals named in the Motion, at the hearing giving them until the close of business on the following day to request the beis din to cease its proceeding and to vacate the ekul. The coercive sanction for each one of them was $10,000 a day until they make that request.…"
Norm Pressman writes to FailedMessiah.com:
When a person or entity files a Chapter 11 proceeding the so called “automatic stay” goes into effect to stop all litigation against the debtor (previously known as the bankrupt). The bankruptcy court controls the Debtor’s assets and parties with claims can either file a claim with the court or ask for “relief” from the stay to continue their litigation elsewhere and then bring a judgment back to the Court to share in the assets of the debtor. (Obviously this description and the following is a simplification of a complex process.)
Congregation Birchos Yosef filed such a Chapter 11 case in New York State earlier this year. It then filed a so called “adversary proceeding” which is essentially a lawsuit in the Bankruptcy Court, accusing Bais Chinoch L’Bonois, Inc. and some of its leaders of “looting” Birchos Yosef.
Bais Chinich then commenced a Beit Din against Birchos Yosef. The Bankruptcy Court in a lengthy and scholarly opinion held that the automatic stay prevented the Beit Din from going forward and imposed a $10,000-a-day sanction from the date of the hearing if the beit din proceedings did not stop:
…[T]he issue of the amount of damages and whether any punitive damages are warranted will be determined at a later hearing. The issue of future compliance [with the automatic stay and the court’s ruling that followed] should be addressed immediately, however. Here, the objectors’ continued pursuit of the beis din proceeding despite warnings from Debtor’s counsel, as well as the tenor of some of their arguments at the hearing, raised a serious concern that the objectors would not withdraw their request of the beis din and that the beis din would proceed to enforce its ekul and issue a sirov notwithstanding the Court’s ruling. Thus coercive sanctions to ensure compliance with the statute were warranted. In re: Ionosphere Clubs, 171 B.R. at 21. A court should consider the issuance of an anti-suit injunction of another tribunal “only with care and great restraint,” China Trade & Dev. Corp. v. M.V. Choong Yong, 837F.2d 33, 36 (2d Cir. 1987), although it should also act “in order to protect its own jurisdiction,” id. at 37; In re Petition of Bd. of Directors of Hopewell Int’l. Ins., 272 B.R. 396, 405, 409- 10 (Bankr. S.D.N.Y. 2002). See also Computer Assocs. Int’l., Inc. v. Altai, Inc., 126 F.3d 365, 372 (2d Cir. 1997), cert. denied 523 U.S. 1106 (1998). Thus, although the beis din improperly issued its own anti-suit injunction here, I chose not to impose coercive sanctions in the first instance on the beis din itself, noting, however, that, just as the beis din’s actions to date have been void ab initio, any rulings going forward in the beis din proceeding would be, too.
I have, though, imposed coercive sanctions on Bais Chinuch and each of the individuals named in the Motion, at the hearing giving them until the close of business on the following day to request the beis din to cease its proceeding and to vacate the ekul. The coercive sanction for each one of them was $10,000 a day until they make that request. It was a [severe] obligation because it would take only one party to disobey my order for this improper process to continue.
Although it is extraneous to my ruling, I am of course mindful of the importance of religion in the community in which the Debtor largely - though, as noted, far from exclusively - operates. This ruling should not be read to exclude religious doctrine and processes from a role in this case. However, they may not be invoked in a unilateral and coercive way to evade the consequences of conduct that neutral laws sanction.
Dated: White Plains, New York
August 24, 2015
/s/Robert D. Drain
United States Bankruptcy Judge
The whole ruling as a PDF file follows immediately below. Right click to open and read in a new browser window or tab; left click to download: