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As a general principle, automatic stay protection does not
inherently extend to legal entities separate from the debtor.
Patton v. Bearden, 8 F.3d 343, 349 (6th Cir. 1993). For this
purpose, “formal distinctions between debtor-affiliated entities
are maintained when applying the stay.” Maritime Elec. Co. v.
United Jersey Bank, 959 F.2d 1194, 1205 (3d Cir. 1991) (holding
that the automatic stay did not extend to claims against the
debtor’s corporation); see also In re Palumbo, 154 Bankr. 357
(Bankr. S.D. Fla. 1992) (holding that the automatic stay did not
extend to claims against a family limited partnership in which
the debtor held 97-percent general and limited partnership
interests). Adhering to these general principles, at least one
court has held that the automatic stay is inapplicable to an
action against an LLC that is associated with a debtor in
6(...continued)
Under current law, the filing of a petition for relief
under the Bankruptcy Code activates an automatic stay
that enjoins the commencement or continuation of a case
in the United States Tax Court. This rule was arguably
extended in Halpern v. Commissioner [96 T.C. 895
(1991)], which held that the tax court did not have
jurisdiction to hear a case involving a postpetition
year. To address this issue, section 709 of the Act
amends section 362(a)(8) of the Bankruptcy Code to
specify that the automatic stay is limited to an
individual debtor’s prepetition taxes (taxes incurred
before entering bankruptcy). The amendment clarifies
that the automatic stay does not apply to an individual
debtor’s postpetition taxes. In addition, section 709
provides that the stay applies to both prepetition and
postpetition tax liabilities of a corporation so long
as it is a liability that the bankruptcy court may
determine. [H. Rept. 109-31 (Pt. 1), at 102 (2005).]
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Last modified: May 25, 2011