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Bankruptcy Court Permission Not Needed for Utility Shut Off for Post-Petition Debts

By Nicholas Ortiz, Boston Bankruptcy Attorney on Jun 12, 2007 in Automatic Stay, Bankruptcy Cases of Interest

The Bankruptcy Appellate Panel for the First Circuit In re Jones, 2007 WL 1651845 (1st Cir.BAP 2007) held that a utility provider does not need to obtain relief from the automatic stay before terminating service for nonpayment of post-petition utility bills.  Section 366 of the Bankruptcy Code provides that a “utility may alter, refuse, or discontinue service if neither the trustee nor the debtor, within 20 days after the date of the order for relief, furnishes adequate assurance of payment, in the form of a deposit or other security, for service after such date.” The panel held that “adequate assurance” did not exist in the absence of timely post-petition payments.  The panel further employed a “slippery slope” argument to undermine the debtor’s position that since post-petition wages were property of the estate the utility shut off would be an act to take possession of this estate property.  Though the panel called it a “heroic bid,” the panel cited cases and stated that the debtor’s interpretation, if adopted, would bar any attempt to collect a post-petition debt. David G. Baker, Esq. was on brief for the debtor.  Christopher S. Aronson, Esq. and Elisa M. Pugliese, Esq., were on brief for Keyspan.

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