Does A U.S. Bankruptcy Court Have Jurisdiction Over a Beis Din, or Jewish Religious Court?

By Michael R. King

Gammage & Burnham, P.C.

Phoenix, AZ

 

QUESTION:  DOES A U.S. BANKRUPTCY COURT HAVE JURISDICTION OVER A BEIS DIN, OR JEWISH RELIGIOUS COURT?

ANSWER:         AT LEAST IN THIS VELT, THE BANKRUPTCY COURT HAS ASSERTED ITS JURISDICTION OVER A BEIS DIN RELIGIOUS
COURT.

Would a Bankruptcy Judge really have the chutzpah to enjoin a Jewish Rabbinical Court and issue sanctions against it?

Congregation Birchos Yosef filed a Chapter 11 reorganization bankruptcy. In re: Congregation Birchos Yosef, Case No. 15-22254 (Bankr. S.D.N.Y.). After filing the Chapter 11 petition, Congregation Birchos Yosef filed an adversary lawsuit in bankruptcy court against Bais Chinuch L'Bonois, Inc. ("Bais Chinuch") and others alleging claims for fraud, breach of fiduciary duty and "looting" of assets of Congregation Birchos Yosef.

The Million Dollar Typo

By Michael R. King

Gammage & Burnham

Phoenix, AZ

QUESTION:    HOW DID THE BANK LOSE OVER $1 MILLION WORTH OF COLLATERAL DUE TO A PETTY TYPOGRAPHICAL ERROR? ANSWER:  A BANKRUPTCY TRUSTEE ACTS AS A HYPOTHETICAL SECURED CREDITOR THAT CAN IGNORE THE REALITIES OF THE FACTS! What a difference two days makes! The State Bank of Toulon lost its collateral securing a loan of $1,100,000 because its security agreement had the number “13” for a date instead of the number “15.”  Really!  David L. Duckworth borrowed $1.1 million from the State Bank of Toulon (the “Bank”) on December 15, 2008.  The loan transaction was documented with a promissory note dated and signed on December 15, 2008.  The document creating the lien against the collateral was an Agricultural Security Agreement (“Security Agreement”) dated December 13, 2008.  The Security Agreement granted a security interest in crops and farm equipment belonging to Mr. Duckworth.  In re Duckworth, 776 F.3d 453 (7th Cir., 2014)