Ascentium Capital, LLC v. Sambo's Logging, Inc.

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS EL DORADO DIVISION

ASCENTIUM CAPITAL LLC, a Delaware limited liability company PLAINTIFF v. Case No. 1:21-cv-1062 SAMBO’S LOGGING, INC., an Arkansas corporation, and RONNIE LEE SMITH, and individual DEFENDANTS ORDER Before the Court is a Joint Motion to Stay filed by Plaintiff Ascentium Capital, LLC and Defendant Sambo’s Logging, Inc. ECF No. 16. These parties “move [the] Court to [s]tay this case, and all the current deadlines, until the Chapter 7 Bankruptcy filed by Defendant Ronnie Lee Smith has been resolved.” ECF No. 16. Counsel for Sambo’s Logging, Inc. notified the Court on October 27, 2022, that “the debtors and defendants within this action have filed Chapter 7 Bankruptcy effective [September 30, 2022]. ECF No. 15, at 1. The notice states that the “automatic stay entered therein remains in effect.” ECF No. 15.

Generally, when a party filed a Chapter 7 bankruptcy petition, all proceedings “against the debtor” are stayed. See 11 U.S.C. § 362(a). Here, Defendant Ronnie Lee Smith has filed a Chapter bankruptcy petition. ECF No. 15, at 2. Consequently, the instant proceeding is stayed automatically as to all claims against Defendant Ronnie Lee Smith. However, it does not appear that Sambo’s Logging, Inc. has filed a bankruptcy petition. “It is well-established that stays pursuant to § 362(a) are limited to debtors and do not encompass non-bankrupt co-defendants,” Am. Prairie Const. Co. v. Hoich, 560 F.3d 780, 789 (8th Cir. 2009), “even if [the co-defendants] are in a similar legal or factual nexus with the debtor.” Id. (quoting Croyden Assocs. v. Alleco, Inc., 969 F.2d 675, 677 (8th Cir. 1992)).

It appears that the parties are relying on 11 U.S.C. § 362(a) to support their Joint Motion to Stay, but they do not cite to any authority in their motion. Thus, the Court declines to apply the § 362(a) automatic stay to the claims against Defendant Sambo’s Logging, Inc., a corporate entity separate from Defendant Ronnie Lee Smith. Accordingly, the Court finds that the Joint Motion to Stay (ECF No. 16) should be and hereby is DENIED. All claims against Defendant Ronnie Lee Smith are STAYED pending the resolution of his bankruptcy petition. However, all claims against Sambo’s Logging, Inc. shall proceed.

IT IS SO ORDERED, this 13th day of January, 2023. /s/ Susan O. Hickey Susan O. Hickey Chief United States District Judge