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Interpleaded funds/automatic stay/property of the estate?
I have a potential client who has a state court lawsuit
(Washington) in which he agreed to interplead $12,000 pending the
court's decision on the case, as substitute security for the other
party's alleged lien on certain personal property.
The court just ruled against him and entered a judgment against him
for $25,000 (confirming an arbitration award), in favor of the other
party. The other party is now seeking to have the interpled
(interplead?) funds released to them to partially satisfy the debt.
If the potential client files a bankruptcy case, does the automatic
stay protect those funds and can he require turnover of the funds
under 542 or something similar? The other party is claiming that it
would not be property of the estate and thus the Stay would not
apply to it.
Thoughts?
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Mark J. Markus
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Board of Legal Specialization
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