By Jeff Sayer
Scorpion Legal Services, LLC
The Honorable Robert Drain of the United States Bankruptcy Court for the Southern District of New York issued an opinion on August 24, 2015 in a case which raised a conflict between bankruptcy law and Jewish religious proceedings.
In In re: Congregation Birchos Yosef, the Debtor was a debtor in possession of a Jewish School in a case filed under Chapter 11. The issue arose when the Debtor asserted an adversary proceeding against Bais Chinuch L’Bonois (“Bais”), another Jewish School asserting claims of breach of fiduciary duty and looting of the Debtor’s assets. Upon the filing of the adversary proceeding, Bais invoked a religious proceeding to hear the case, in which a Jewish religious court, a Beis Din, would allow the principals of the Debtor to dispute the charges brought by the Bais. If the principals of the Debtor did not participate in the Jewish court hearing, the result would be at a minimum a shunning by their religious community, a Sirov, and potentially all Orthodox Jews.
When Bais invoked the Jewish court hearing, the principals of the Debtor were sent a summons, a Hazmana, inviting them to participate in the hearing. Upon receipt of the summons, the Debtor’s counsel wrote to those who had invoked the hearing that they had violated the automatic stay and needed to stop the hearing.