Summary
This Opinion & Order from the U.S. District Court for the Western District of Wisconsin addresses a defendant's suggestion of bankruptcy and request for an automatic stay under 11 U.S.C. § 362(a)(3). The court analyzes whether the stay extends to non-debtor employee defendants based on their potential indemnification obligations to the debtor, Wellpath, LLC. Concluding that the stay likely applies, the court stays all proceedings in the case pending further direction from the Bankruptcy Court and schedules a status conference for April 2025.
Topics
Practice areas
Questions Presented
- Whether the automatic stay under 11 U.S.C. § 362(a)(3) applies to this action against non‑debtor defendants.
Holdings
- The court held that the case is stayed pending further direction from the Bankruptcy Court because § 362(a)(3) applies.
Key quotations
“IT IS ORDERED that: 1. The current schedule in this case is STRUCK and this case is STAYED until further notice.”
Factual background
Defendants filed a Suggestion of Bankruptcy and Notice of Stay for Wellpath, LLC, and an Amended Interim Order enforcing the automatic stay, asserting that the stay extends to all lawsuits filed as of the petition date in which the debtor is named, including claims against non‑debtor defendants. The court noted that Wellpath is not a defendant but may be liable for indemnification of the employee defendants. The only other pending motion is plaintiff’s motion for partial summary judgment.
Procedural history
Plaintiff filed suit; defendants filed a Suggestion of Bankruptcy and Notice of Stay referencing the Bankruptcy Court's automatic stay order. The district court, after considering the applicability of § 362(a)(3), entered an order staying the case pending further bankruptcy court direction.
Remand instructions
The current schedule is struck and the case is stayed until further notice. A status conference is scheduled by telephone on April 16, 2025, at 11:30 a.m. to address whether the stay should continue. Counsel for the Wellpath employee defendants must promptly notify the court of any relevant updates in the bankruptcy case.