Maine Bankruptcy Court Sanctions Credit Union for Stay Motion

11 Oct Maine Bankruptcy Court Sanctions Credit Union for Stay Motion

Judge Haines of the Maine Bankruptcy Court in re Hutchins, 393 B.R. 257 (Bankr.D.Me 2008) sanctioned a credit union for bringing a motion for relief from the automatic stay that was subsequently withdrawn. The credit union had failed to comply with local rules requiring a conference before the filing of the motion.

The court noted that had the conference taken place, the motion would likely not have been brought, given that it was withdrawn after it was opposed. The court used its inherent Section 105 authority to tax a portion of the debtor’s attorney’s fees against the credit union. However, the court only allowed a small portion of the fees sought.

The debtor’s attorney had sought $1,559 for work in connection with the motion, but the court awarded only $281.50. As a practical matter, this type of fee award creates strong disincentives to attempts to hold creditors responsible for ill-advised motions. However, that any fees were awarded is interesting because here in Massachusetts our local rules contain a similar conference requirement as a prerequisite to motion practice. This rule is almost always ignored.

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