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the now-liquidating Debtors contend that the scope of the NJ Action has expanded beyond what section 362(b)(4) of the Bankruptcy Code permits.13Those motions were scheduled in the ordinary course.14On the same date (August 7, 2026), the Debtors filed notices purporting to remove the NJ Action directly to the United States Bankruptcy Court for the Western District of Pennsylvania.15In response, the Attorney General filed emergency motions to strike the notices or, alternatively, to remand to the Superior Court to prevent disruption to the Superior Court's schedule.16She argued that removal was untimely, filed in the wrong court, and otherwise impossible as the NJ Action was an exercise of New Jersey's police powers.17 The Court heard the motions to strike on August 13, 2026 (on roughly one-day notice) with appearances from the Debtor and its state court counsel ("Litigation Counsel"),18the Estate Trustees, and the Attorney General.19Only the Debtors filed written responses just prior to the hearing, but the Estate Trustees' comments during the hearing ultimately echoed the same
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practical frustrations. Put simply, they all questioned the continued purpose of the NJ Action given that: (1) the Debtors have ceased operations and no one opposes injunctive relief; and (2) New Jersey's monetary claim could be more efficiently quantified through the claims allowance process or negotiation with the Estate Trustees.20Moreover, aside from some potential recoverable transfers identified by the Attorney General, the Estate Trustees likely have few assets with which to pay claims.21That said, the Estate Trustees took no position regarding removal, expressing only a preference for the status quo because the "case management order is absurd" and "an effort of futility."22
The Debtors acknowledged that the notices of removal were filed in the wrong court but maintained they were timely. They theorized that the triggering event for the removal period was the July 6, 2026 entry of the Superior Court's order finding the NJ Action excepted from the stay.23As to the removability of the NJ Action, the Debtors vaguely asserted that it has exceeded the police powers exception because the injunctive and monetary relief requested are not opposed.24On the other hand, they could not articulate why removal was worthwhile or necessary.25
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For her part, the Attorney General emphasized her "responsibility to ensure that laws are not simply not violated, but that when they've been violated, there are clear rulings as well as ramifications as a result of doing so"26and her "need to proceed in a way that makes sure that the validity of [New Jersey's] laws is just -- is reinforced and applied."27As best the Court can understand, the Attorney General desires findings on summary judgment, possibly aided by adverse inferences imposed as a discovery sanction, as a public vindication.28Notably, her counsel could not explain what further discovery was necessary or its purpose beyond simply supporting a summary judgment motion.29Nevertheless, the Attorney General concedes that the Debtors likely lack the funds to pay New Jersey's claim once reduced to a judgment.30 Regardless, the Attorney General insisted that the NJ Action should proceed expeditiously because the Superior Court has already determined that it falls within the police powers exception to the stay.31Indeed, she argued that this Court is bound by the Superior Court's findings under the Rooker-Feldman doctrine, meaning that the NJ Action is not removable.32 Although this would also doom the Debtors' motions to enforce the stay, the Attorney General did
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not urge the Court to rule on that matter at this time.33Instead, she focused solely on securing the prompt return of jurisdiction to the Superior Court to prevent interference with the case management schedule.
Concerned by the Attorney General having seemingly run roughshod over the Estate Trustees and the lack of pragmatism displayed, the Court directed the parties to meet and confer to explore a global resolution. The Court then took the matter under advisement to address the Attorney General's Rooker-Feldman argument. While this memorandum was undergoing final revision, the parties reported productive discussions and asked the Court to delay hearing the motions to enforce the stay to afford them more time.34
II. JURISDICTION
This Court has authority to exercise jurisdiction over the subject matter and the parties under 28 U.S.C. §§ 157(a), 1334, and the Order of Reference entered by the United States District Court for the Western District of Pennsylvania on October 16, 1984. While the NJ Action appears to be a non-core proceeding "related to" cases arising under title 11 of the United States Code, the Debtors argue it is essentially a core proceeding under 28 U.S.C. § 157(b)(2)(B).35 Regardless, the Court indisputably has jurisdiction and authority to strike a procedurally defective notice of removal.
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III. DISCUSSION
Removal of civil actions related to bankruptcy cases is controlled by 28 U.S.C. § 1452(a). It provides in relevant part:
A party may remove any claim or cause of action in a civil action other than . . . a civil action by a governmental unit to enforce such governmental unit's police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.36
Once removed, a district court with the requisite "related-to" jurisdiction can (and often does automatically) refer the matter to the bankruptcy judges for the district.37Removal by itself does not affect a transfer of venue to a different district's bankruptcy court. Procedurally, "[a] notice of removal must be filed with the clerk for the district and division where the state or federal civil action is pending."38If the civil action subject to removal is already pending when the bankruptcy case is commenced, the notice must be filed within the longer of: "(A) 90 days after the order for relief in the bankruptcy case;" or "(B) if the claim or cause of action has been stayed under § 362, 30 days after an order terminating the stay is entered."39
A. The Removal Notices were Filed in the Wrong Court and were Untimely Assuming the NJ Action could be removed, 28 U.S.C. § 1452 only authorizes removal "to the district court for the district where such civil action is pending"—namely, the
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District of New Jersey.40Therefore, under Bankruptcy Rule 9027(a)(1), the Debtors should have filed the notices of removal in the divisional office of the United States District Court for the District of New Jersey where the NJ Action resides, not the United States Bankruptcy Court for the Western District of Pennsylvania. The Debtors concede this point and ask that the notices be stricken without prejudice. Unfortunately, they ignore that the notices are also untimely. Because the NJ Action was pending when the Debtors commenced these cases, Bankruptcy Rule 9027(a)(1)(A) first sets a default period of 90 days from the petition date for removal. Since the petitions were filed on May 7, 2026, the notices should have been filed by August 5, 2026, but they were filed two days later on August 7, 2026. Curiously, the Debtors suggest timeliness should be measured under Bankruptcy Rule 9027(a)(1)(B) from the date of the Superior Court's order determining the NJ Action was excepted from the stay.41First off, the Superior Court did not and could not terminate the automatic stay because that power falls within the bankruptcy court's exclusive jurisdiction.42But even if that characterization was accurate, 30 days from an order entered on July 6, 2026 is still August 5, 2026.
In sum: wrong place, wrong time. As such, the notices of removal must be stricken with prejudice.
B. The NJ Action is Not Removable on this Record
As previously stated, "a civil action by a governmental unit to enforce such governmental unit's police or regulatory power" cannot be removed under 28 U.S.C. § 1452(a).43 The Attorney General argues the Superior Court's order finding that the NJ Action falls under the
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police power exception to the stay conclusively establishes that it is not removable. Considering the procedurally improper removal of the NJ Action, the Court need not reach the question of its removability. Yet whether the NJ Action is a proper exercise of New Jersey's police and regulatory power remains relevant to the Debtors' motions to enforce the automatic stay scheduled to be heard in the coming weeks.44For that reason, judicial economy is best served by disposing of the Attorney General's Rooker-Feldman argument now. To cut right to it—the Court is not bound by the Superior Court's findings that the NJ Action is excepted from the stay under section 362(b)(4).
"The Rooker-Feldman doctrine takes its name from two Supreme Court cases policing the boundary between the original jurisdiction of the district courts and the appellate jurisdiction of the Supreme Court."45In T. M. v. Univ. of Maryland Med. Sys. Corp., the Supreme Court of the United States explained:
Under what has become known as the Rooker-Feldman doctrine,
federal district courts lack jurisdiction over "cases brought by state- court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and
inviting district court review and rejection of those judgments."46
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The doctrine is a narrow one.47Put simply, "an action that is, or is in effect, an appeal of a state- court judgment may not be lodged in any federal court but the Supreme Court."48 There is no question that Rooker-Feldman applies in bankruptcy cases.49But, as observed by the United States Court of Appeals for the Third Circuit, this seems an "apparent contradiction" because "bankruptcy courts are empowered to avoid state court judgments, to modify them, and to discharge them."50In In re Adams, the Third Circuit dispelled any friction, stressing that
those bankruptcy-court powers over state-court judgments are not
based on separate invocations of jurisdiction that violate Rooker- Feldman. Each, if properly asserted, falls under the grant of
bankruptcy court jurisdiction in 28 U.S.C. § 1334. And each, again if properly asserted, lays claim to some independent bankruptcy-
court power contained in Title 11.51
The lesson is that "Rooker-Feldman is not offended when a bankruptcy court acts pursuant to a statutory bankruptcy power under the grant of bankruptcy jurisdiction."52
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Here, the Court agrees that the Superior Court had concurrent jurisdiction to assess the impact of the automatic stay on matters before it.53And the Attorney General concedes,54as she must, that the bankruptcy court has exclusive jurisdiction to modify, annul, or terminate the stay under section 362(d).55As illustrated by Third Circuit precedent,56the bankruptcy court's exclusive jurisdiction and statutory authority to enforce the stay negates any Rooker-Feldman concerns about the improper exercise of appellate jurisdiction.57But more importantly, an erroneous state court determination that the stay is inapplicable necessarily "effect[s] an improper modification of the automatic stay" that is beyond the state court's authority and jurisdiction.58 Further judicial proceedings based on that faulty determination would therefore violate the stay and be void ab initio.59Frankly, it would be irrational if this Court was powerless to prevent an
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inadvertent state-court modification of a federal injunction that risked undermining a bankruptcy case within its exclusive jurisdiction.60
The Attorney General cites In re James for the proposition that "the bankruptcy and district courts cannot collaterally examine the merits of a state court police power proceeding."61 That is essentially what the Third Circuit held, but it does not mean what the Attorney General broadly suggests. With the benefit of context, it is apparent that decision is narrowly confined to its somewhat convoluted facts and littered with dicta about the Rooker-Feldman doctrine that has since been disavowed.
Basically, New Jersey obtained a civil forfeiture judgment against a chapter 7 debtor while the stay was in effect.62The bankruptcy court subsequently found that the action was not excepted under section 362(b)(4) and vacated the judgment.63The district court affirmed, albeit for different reasons. The district court concluded that civil forfeitures are generally excepted as an exercise of the state's police power, but that this use of the forfeiture power was not factually supported.64On further appeal, the Third Circuit agreed that section 362(b)(4) facially applied to the civil forfeiture and criticized the lower courts for examining the merits of the proceeding:
It is clear that in this case the district court questioned the merits of the state court proceedings after deciding that the police power
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exception was applicable. However, once validly entered in a court of competent jurisdiction, a judgment is considered valid until overturned or vacated by that court or an appellate court with supervisory powers over that court's system.65 Finding that "the district court premised its decision to vacate the state court judgment on its perception that the state court judgment was erroneously decided on the merits," the Third Circuit reversed.66Thus, the holding of In re James is unremarkable: where the stay does not apply to a police powers action, a federal court cannot vacate a state court judgment on the merits. In re James is clearly rooted in principles of federal-state comity and invokes the Rooker-Feldman doctrine as placing limits on what the federal courts can do.67The analysis also draws distinctions between staying proceedings and vacating a judgment, initially suggesting that a state court's refusal to obey a federal stay must be addressed in the state courts.68Yet the Third Circuit went on to opine that Rooker-Feldman may have a "void ab initio" exception.69Later decisions walked back that idea, recognizing that the varied reasons for finding a judgment void invites the very type of review that Rooker-Feldman prohibits.70Still, the Third Circuit has
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consistently viewed judgments that are void ab initio due to the automatic stay differently.71 Ultimately, In re James should be read narrowly and with the understanding that more recent decisions, like In re Adams, reflect the Third Circuit's view of Rooker-Feldman's application in bankruptcy cases.
The bottom line is that the Court is not bound by the Superior Court's findings regarding the applicability of the automatic stay. The issue remains live and will be decided in the context of the Debtors' motions to enforce the stay. The Court notes that while the Debtors have the ultimate burden to prove a stay violation under section 362(k), the Attorney General bears the initial burden to show that section 362(b)(4) applies.72This requires a detailed analysis consistent with Third Circuit precedent that neither has yet provided.73To that end, the Court notes that even if the NJ Action is excepted from the stay, the police powers do not immunize collection acts undertaken in a privileged context.
In the interim, the Attorney General is correct that the Superior Court's order is valid and binding on the parties. On remand, the Superior Court may proceed in its discretion with
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the understanding that the Court's ruling on the motions to enforce the stay could render such actions void. To be clear, that should not be interpreted as signaling disagreement with the Superior Court's findings but merely a statement of law. This Court, like the Superior Court, is duty-bound to adjudicate the matters before it and the chips will fall where they may. In closing, the Court offers a few observations for the benefit of the Attorney General and the Superior Court. Upon the Debtors' chapter 7 filings, their principals have been dispossessed of authority over the Debtors in favor of the Estate Trustees.74As a result, the Estate Trustees are the Debtors' only authorized decision-makers regardless of whether they have formally appeared in the NJ Action or not. Moreover, Litigation Counsel has no authority to represent the Debtors or Estate Trustees unless and until their retention has been approved by this Court.75The takeaway is that the NJ Action cannot proceed without the Estate Trustees, a reality that the Attorney General had seemingly ignored. Still, it is encouraging that discussions among the parties are now underway as that is likely the most efficient path to satisfying the Attorney General's interest in serving the citizens of New Jersey.
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IV. CONCLUSION
In light of the foregoing, the Court will strike the notices of removal. This opinion constitutes the Court's findings of fact and conclusions of law in accordance with Fed. R. Bankr. P. 7052. The Court will issue a separate order consistent with this opinion. ENTERED at Pittsburgh, Pennsylvania.
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Dated: September 9, 2026 GREGORY L. TADDONIO
CHIEF UNITED STATES BANKRUPTCY JUDGE