Summary: The Youngbloods are guarantors of several loans between Youngblood Construction and BB&T. Following the filing of the Chapter 11, Youngblood Construction brought a Motion to Extend Stay for the Youngbloods individually.
The Bankruptcy Court recognized that in “unusual circumstances” the Debtor and a third party may share such common identity that judgment against one may “in effect be a judgment or finding against the debtor.” Kreisler v. Goldberg, 478 F.3d 209, 213 (4th Cir. 2007) (citing A.H. Robins Co., v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986)).
In this case, however, the stay should not be extended to the Youngbloods, who could file their own bankruptcy and obtain the requested relief. Further, as the lawsuits brought by BB&T were based on the Youngbloods’ individual guaranty agreements, the Youngbloods were not subjected to any additional liability and could seek recompense from Youngblood Construction.
Commentary: Strictly speaking, Youngblood Construction was seeking injunctive relief and this should, pursuant to Rule 7001, have been brought as an Adversary Proceeding.
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