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bankruptcy automatic stay

Can Filing Bankruptcy Halt Trademark Litigation?

When a person or company files for Bankruptcy, an automatic stay is imposed against all creditors and even includes putting a stay on lawsuits, including those involving trademarks filed in Washington State.  This means that nobody can attempt to collect on a debt after you have filed a bankruptcy case and the debt was incurred prior to your bankruptcy filing.  If you wish to continue on with a lawsuit or a collection effort, then you must request permission from the bankruptcy court for “relief” from the automatic stay.  If relief is granted in your case then collection efforts may continue.

A recent case filed in the Western District of Washington, Precision Automotive LLC v. Avstar Fuel Systems, Inc., No. 10-1174 (W.D. Wash. Sept. 13, 2010) (Jones, J.), stayed a trademark infringement claim that otherwise would have moved forward.  If the debt allegedly owed is considered a non dischargeable debt, for instance if the debt was incurred due to intentional acts of the debtor, a plaintiff may argue that this debt is non dischargeable.  If a creditor wishes to object to a debtors bankruptcy filing they must file an adversary case in order to make their argument and have a judge determine whether a certain debt is considered dischargeable and whether collection efforts can continue post bankruptcy.  If a debt is non objected to in a timely fashion, a creditor may lose the right to challenge whether the particular debts should be discharged in a bankruptcy or not.  If you are not sure whether a debt is considered dischargeable you should contact a bankruptcy professional who may be able to provide some guidance to you in your situation.

If you have additional questions about the bankruptcy automatic stay and how it can halt you legal case, please call Symmes Law Group at 206-682-7975 to schedule your free consultation.

  • Richard Symmes

    Hi, Richard here

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