Virginia Lawyers Weekly VA Lawyers Weekly
Where the debtor appealed from the bankruptcy court’s order granting relief from the automatic stay, but the bankruptcy court then issued a discharge order while her appeal was pending, the appeal was moot. While the debtor’s appeal essentially sought reinstatement of the automatic stay, the discharge order removed the automatic stay by operation of law.
Background
Rizwana Askri executed a promissory note in the amount of $481,500 secured by real property located in Sterling Virginia, pursuant to a deed of trust to which Specialized Loan Servicing LLC is the assignee. On Nov. 24, 2021, Askri filed a petition under Chapter 7 of the United States Bankruptcy Code.
Specialized Loan Servicing filed a motion for relief, seeking relief from the automatic stay with respect to the property. Following a hearing, the bankruptcy court granted Specialized Loan Servicing’s motion for relief from the automatic stay and terminated the automatic stay, permitting Specialized Loan Servicing to enforce the deed of trust.
On Feb. 28, 2022, Askri timely noticed an appeal. On May 18, 2022, the bankruptcy court entered a discharge as to Askri.
Analysis
This court finds that the discharge entered by the bankruptcy court renders Askri’s appeal moot. Upon the filing of a bankruptcy petition, an automatic stay shields petitioner from certain actions by creditors, including to enforce a lien. That stay expires by operation of law upon a bankruptcy court’s entry of a Chapter 7 discharge as to the debtor.
By appealing the bankruptcy court’s order granting Specialized Loan Servicing relief from the automatic stay, Askri seeks to return to the status quo before Specialized Loan Servicing’s motion was granted—that is, when an automatic stay was effectively shielding Askri from certain activities by creditors. But because the bankruptcy court’s entry of a discharge removes the shield of an automatic stay by operation of the law, the status quo can no longer be reinstated. Courts have concluded that appeals of bankruptcy orders granting relief from the automatic stay provision of 11 U.S.C. § 362(a) are rendered moot upon the debtor’s discharge.
Appeal dismissed.
Askri v. Specialized Loan Servicing LLC, Case No. 1:22-cv-00231, Feb. 17, 2023. EDVA at Alexandria (Nachmanoff). VLW 023-3-076. 4 pp.
