Fifth Circuit Receivership Opinion Raises Questions About the Automatic Stay

August 16, 2024

Fifth Circuit Receivership Opinion Raises Questions About the Automatic Stay

Fifth Circuit says that the court must have obtained personal jurisdiction over a third party in a receivership to enforce an injunction. Is the same true for the automatic stay and the discharge injunction in bankruptcy? Is there no injunction before there’s personal jurisdiction?

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Opinion Link

View Opinion

https://abi-opinions.s3.amazonaws.com/SEC+v+Stanford.pdf

Case Details

Case Citation

SEC v. Stanford International Bank Ltd., 23-10726 (5th Cir. Aug. 9, 2024)

Case Name

SEC v. Stanford International Bank Ltd.

Case Type

Business

Court

5th Circuit

Bankruptcy Tags

Automatic Stay

Fraud

Venue/Jurisdiction

Discharge/Dischargeability

International Insolvency

Comments

Submitted by John Bircher on August 16, 2024

I don't see this as a problem for bankruptcy matters. Title 11 has its own jurisdictional statutes that are applicable. If the 5th meant to extend the holding to bankruptcy, it would eviscerate the Code.

Submitted by Charles Tatelbaum on August 16, 2024

The SEC is increasingly using equity receiverships in Ponzi scheme cases throughout the country. This decision could have a major impact on that strategy, at least in the Fifth Circuit for the time being.