12 B 27635

In re Tranise D. Rose The debtor filed a motion for sanctions against the collections law firm representing debtor's judgment creditor, alleging a violation of the automatic stay. Prior to the bankruptcy case, the law firm caused a citation to discover assets to be served on the debtor's bank, which placed an administrative hold on debtor's bank accounts. The issue before the Court was whether the law firm willfully violated the automatic stay when it refused to take steps to release the hold on the bank accounts upon learning of the bankruptcy petition. The Court held that continuation of the citation proceeding violated § 362(a)(1) of the Bankruptcy Code. The Court further found that the law firm's violation was willful. The law firm refused to to take steps to release the funds, asked for case law in support of debtor's position, and demanded an order from the bankruptcy court before it would comply with debtor's request to dismiss the citation proceeding. Although the law firm eventually proceeded to get the funds released, it failed to communicate that decision to debtor's counsel even though it knew of counsel's intent to seek sanctions if steps were not immediately taken to release the hold on debtor's accounts. The law firm further exacerbated the situation by failing to appear the initial hearing on the motion for sanctions. The Court granted the motion and awarded attorneys' fees as a sanction against the law firm and in favor of Debtor's counsel pursuant to § 362(k)(1).