Credit Alliance Corp. v. Williams

851 F.2d 119 (1988)

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Nature of the Case

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Facts

Penn signed a three-year conditional sales contract note with Croushorn Equipment who assigned the note to Credit (P). D executed a guaranty of Penn Hook's obligation in favor of P. Penn defaulted on its obligation. P filed suit against Penn Hook, and D. Penn petitioned for bankruptcy under Chapter 11. The Southern District of New York entered a default judgment in the amount of $62,866.70 against the three defendants. P instituted garnishment proceedings, and the matter was referred to the bankruptcy court which held that the automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362, rendered void the default judgment against Penn and the non-debtor guarantors, entered after Penn Hook petitioned for bankruptcy. The district court reversed the decision of the bankruptcy court with respect to the guarantors and held that P's claim against D was not stayed or void. D appealed.