It is commonly understood that, upon commencement of a bankruptcy case, section 362 of the Bankruptcy Code operates as an automatic statutory injunction against a wide variety of creditor actions and activities. The automatic stay enjoins (1) “commencement or continuation” of certain proceedings, (2) “enforcement” of a judgment, (3) “any act” to obtain possession of or exercise control over property, (4) “any act” to create, perfect or enforce a lien, (5) “any act” to collect assess or recover claim, (6) “set off” of any debt, and (7) “commencement or continuation” of certain tax proceedings. All of these elements speak in terms of preventing actions that might otherwise be taken by the party against whom the automatic stay operates.
However, are there instances in which non-action by a creditor can violate the automatic stay? The Tenth Circuit recently addressed this issue in WD Equipment LLC v. Cowen (In re Cowen) (“Cowen”). Its decision added to a split among the Circuits on whether non-action can constitute an automatic stay violation.