Pizarro v. Euros El Tina Restaurant Lounge and Billiards Corp.

Issue

The court considered whether an automatic bankruptcy stay pauses an action brought by the bankruptcy debtor, including pending motions for summary judgment seeking dismissal of the debtor’s counterclaims.

Court’s reasoning

The court read 11 U.S.C. § 362(a) to impose an automatic stay in actions “against the debtor.” It concluded that the stay does not apply to an action brought by the debtor. The court therefore ruled that the pending motions for summary judgment addressing Santiago Quezada’s counterclaims were not stayed.

Quezada argued that he lacked money to prosecute his case. The court stated that the bankruptcy trustee must decide whether the counterclaims are worth pursuing, whether they should be dropped, and whether Quezada should continue prosecuting them or the matter should become a bankruptcy proceeding brought against another party.

The court also noted that Euros El Tina had not filed for bankruptcy.

Ruling and deadlines

Judge Alvin K. Hellerstein denied the motion for a stay. The court enlarged Quezada’s deadline to file opposition papers responding to the pending summary-judgment motions until June 28, 2024, to give Quezada and the trustee time to consider whether to continue the counterclaims. The court similarly enlarged Euros El Tina’s deadline. It stated that failure to file would result in dismissal of Euros El Tina’s counterclaims.