Acevedo Does Not Curtail Bankruptcy Courts’ Power to Retroactively Annul Automatic Stays
(Commentary on Rajesh C. Patel v. Rishi M. Patel, 23-12847, 11th Cir., 8 July 2025)

I. Introduction

The Eleventh Circuit’s published opinion in Rajesh C. Patel v. Rishi M. Patel confronted a knotty question at the intersection of bankruptcy and federal jurisdiction: Does the Supreme Court’s 2020 decision in Roman Catholic Archdiocese of San Juan v. Acevedo Feliciano strip bankruptcy courts of their longstanding authority—grounded in 11 U.S.C. § 362(d)(1)—to “annul” (i.e., retroactively lift) the automatic stay? In affirming both the bankruptcy and district courts, the Eleventh Circuit held that Acevedo has no such effect. Consequently, bankruptcy courts within the circuit remain empowered to validate actions that occurred in violation of a stay when equity and “cause” so demand.

The dispute arose from decades-long infighting between two branches of a prominent Patel family hotel empire. Rajesh (“R.C.”) Patel filed Chapter 11 in 2016, activating the automatic stay. Nevertheless, he voluntarily litigated wide-ranging claims in a post-petition arbitration, hoping to benefit if victorious but planning to invoke the stay as a “poison pill” if he lost. After he did lose, he sought to nullify the award by belatedly raising the stay. The bankruptcy court instead annulled the stay, finding R.C.’s conduct to be pure gamesmanship. On appeal, R.C. relied almost entirely on Acevedo, arguing that any retroactive validation is now forbidden as an impermissible “nunc pro tunc” jurisdictional exercise. The Eleventh Circuit rejected that proposition.

II. Summary of the Judgment

• Holding: Acevedo—a case about removal jurisdiction and nunc pro tunc state-court orders—does not limit a bankruptcy court’s statutory authority under § 362(d) to annul the automatic stay “for cause.”
• Standard Applied: Annulment orders are reviewed for abuse of discretion; legal questions are reviewed de novo; factual findings for clear error.
• Key Findings:
  • The bankruptcy court had explicit statutory power to grant retroactive relief (“annul, terminate, modify, or condition”) under § 362(d)(1).
  • Acevedo concerns 28 U.S.C. § 1446(d) and the divestiture of state-court jurisdiction upon removal—conceptually distinct from § 362(d).
  • R.C. Patel’s strategic manipulation of the stay constituted “cause” warranting annulment.
  • Any procedural irregularity in how the request for annulment was made was harmless; R.C. had ample notice and opportunity to oppose.
• Disposition: Judgment of the district court affirmed; bankruptcy court’s annulment stands.

III. Analysis

A. Precedents Cited

• Roman Catholic Archdiocese of San Juan v. Acevedo Feliciano, 140 S. Ct. 696 (2020) – The central precedent invoked by the debtor. Held that a federal court cannot use a nunc pro tunc remand order to retroactively confer jurisdiction on a state court after removal.
• In re Albany Partners, Ltd., 749 F.2d 670 (11th Cir. 1984) – Early Eleventh Circuit authority recognizing that annulment of a stay is permissible to validate acts taken during the stay.
• In re Merriman, 616 B.R. 381 (B.A.P. 9th Cir. 2020) – Post-Acevedo decision expressly rejecting the view that Acevedo undercuts § 362(d) annulment power.
• Other persuasive authorities: Khan (S.D. Fla. 2021); Dellinger (Bankr. N.D. Ala. 2021); Parker (Bankr. W.D. Pa. 2021); and contra Telles (Bankr. E.D.N.Y. 2020).

B. Legal Reasoning

1. Statutory Text Controls: Section 362(d) expressly empowers bankruptcy courts to grant relief in four discrete ways—“terminating, annulling, modifying, or conditioning” the stay. Congress’s inclusion of “annulling” signals intentional authorization of retroactive effect.
2. Different Statutory Silos: Acevedo interpreted the removal statute (§ 1446(d)), which automatically strips state courts of jurisdiction once a case is removed. The Eleventh Circuit emphasized that § 1446(d) contains no analogue to § 362(d)’s expansive relief language. Therefore, the policy considerations in Acevedo—preventing federal courts from breathing life into void state orders—do not translate to bankruptcy stay annulments.
3. Jurisdiction vs. Stay: The invalidity of actions taken in violation of a stay is not jurisdictional in the same sense as the divestiture under § 1446(d). Here, the state court possessed concurrent jurisdiction over “related-to” matters (§ 1334(b)); it was only the stay that temporarily barred enforcement against the debtor’s estate. Removing that stay does not “confer jurisdiction” retroactively; it removes an injunction blocking enforcement.
4. Equitable Considerations (“Cause”): The bankruptcy court found R.C. Patel’s calculated silence about the stay and post-loss attempt to weaponize it against his adversary constituted “gamesmanship.” Equity therefore favored the innocent Hasmita Party, not the debtor.
5. Procedure and Harmless Error: Although formal motion practice under Rules 4001 and 9014 was imperfect, R.C. had actual notice, reserved the right to respond, and fully litigated the matter. Under 28 U.S.C. § 2111, any deviation was harmless.

C. Impact of the Decision

• Binding Precedent in the Eleventh Circuit: Within Alabama, Florida, and Georgia, Patel cements that Acevedo does not limit retroactive relief under § 362(d). Bankruptcy judges may confidently grant annulments when equity demands and creditors now have clear authority to seek such relief.
• National Persuasive Weight: The opinion joins the Ninth Circuit’s BAP (Merriman) and others, tipping the growing majority view against Telles. Uniformity is important because bankruptcy practice often crosses state lines.
• Practical Litigation Effects:
  • Debtors cannot safely lie in wait, participate in state or arbitral proceedings, then cry “automatic stay” only after an unfavorable outcome.
  • Creditors should nonetheless monitor bankruptcy filings closely; but when blindsided by a concealed stay, they have a potent remedy—seek annulment instead of forfeiting the fruits of litigation.
• Doctrinal Clarity: The decision delineates the conceptual border between (1) nunc pro tunc orders correcting clerical mistakes and (2) statutory annulment of automatic stays, reducing future confusion.

IV. Complex Concepts Simplified

• Automatic Stay (11 U.S.C. § 362(a)) – An immediate, all-embracing injunction that freezes nearly all actions against the debtor or estate once a bankruptcy petition is filed. Think of it as a legal “pause button.”
• Annulment of the Stay – Retroactively erases the pause for specific acts. It is akin to giving judicial permission “after the fact” so those acts are deemed valid from inception.
• Nunc Pro Tunc – Latin for “now for then.” A tool courts use to correct the record so that it reflects what should have been recorded earlier; it does not create jurisdiction where none existed.
• Removal Jurisdiction (§ 1446) – Allows defendants to move a case from state to federal court. Upon removal, the state court’s power over the case is entirely suspended until remand.
• “For Cause” – A flexible equity-based standard allowing bankruptcy courts to tailor relief when circumstances—such as debtor misconduct—justify deviation from the blanket stay.

V. Conclusion

The Eleventh Circuit’s decision in Rajesh C. Patel v. Rishi M. Patel reinforces the fundamental structure Congress built into the Bankruptcy Code: while the automatic stay is broad, bankruptcy courts retain equally broad discretion to fashion equitable relief—including retroactive annulment—when justice requires. Acevedo remains a significant pronouncement in the removal context, but it does not hamstring bankruptcy judges. Creditors, debtors, and practitioners now have authoritative guidance that strategic abuse of the stay will not be rewarded, and the statutory text of § 362(d) remains the polestar for stay-relief determinations.