First Impressions: Eleventh Circuit Rules that Annulment of Automatic Stay Does Not Violate U.S. Supreme Court's Prohibition of Nunc Pro Tunc Orders

After the U.S. Supreme Court in Roman Catholic Archdiocese of San Juan v. Acevedo Feliciano, 589 U.S. 57 (2020) ("RCA"), circumscribed the use of nunc pro tunc ("now for then") orders that make relief ordered by a court apply retroactively to an earlier point in time, the continued use of such orders in bankruptcy cases became an open question. Lower courts have largely distinguished RCA, particularly in cases involving retroactive approval of professional retention application or nunc pro tunc modification of the automatic stay where such relief does not result in the imposition of jurisdiction retroactively in cases where it did not exist previously—the gravamen of the Supreme Court's ruling in RCA. 

The U.S. Court of Appeals for the Eleventh Circuit weighed in on this issue as a matter of first impression in In re Patel, 142 F.4th 1313 (11th Cir. 2025). The court of appeals affirmed rulings annulling the automatic stay to validate a post-bankruptcy state court order confirming an arbitration award against the debtor, even though the order was technically void when entered due to the automatic stay. According to the Eleventh Circuit, annulling the automatic stay, which is specifically authorized by the Bankruptcy Code, did not run afoul of RCA, where a federal district court ruled that an order purporting retroactively to confer jurisdiction on a Puerto Rico trial court order was improper because the trial court never had jurisdiction to enter the order when it was issued because the litigation had been removed to the district court. 

RCA 

In RCA, the Catholic Church in Puerto Rico terminated a pension plan for employees of its school. A commonwealth trial court entered a judgment directing the church to pay $4.7 million and ordered seizure of its assets to satisfy the judgment. The Puerto Rico Supreme Court affirmed the trial court, and the Catholic Church appealed that decision to the U.S. Supreme Court. 

The problem was that, before the trial court entered its orders, the church had removed the litigation to federal district court, arguing that the case was related to a bankruptcy case that had been filed by the school's pension trust. A state court loses jurisdiction once a notice of removal is filed. The bankruptcy court did dismiss the bankruptcy case shortly before the trial court issued its orders in March 2018. However, the federal district court did not remand the removed litigation to the trial court until nearly five months later. The federal district court sought to address this lag with a nunc pro tunc judgment stating that the remand order "shall be effective" as of the date that the bankruptcy court dismissed the trust's bankruptcy case. 

The U.S. Supreme Court ruled in its per curiam opinion that the trial court had no jurisdiction until the litigation was remanded and that its orders were therefore void. The nunc pro tunc order was not effective to cure the jurisdictional defect of the trial court's orders. The Court acknowledged that a federal court may issue a nunc pro tunc order to "reflect the reality of what has already occurred," but emphasized that such an order "presupposes a decree allowed, or ordered, but not entered, through inadvertence or error." This was not the case here. The Court accordingly vacated the Puerto Rico Supreme Court's judgment without considering the merits of the appeal and remanded for further proceedings. 

Recent Court Rulings 

Before RCA was handed down, bankruptcy courts often granted certain retroactive relief, particularly with respect to orders approving the retention of professionals, authorizing the rejection of executory contracts or unexpired leases, authorizing postpetition financing, conferring derivative standing to prosecute estate claims, or granting relief from the automatic stay. 

This practice has been reexamined since the RCA ruling, but with mixed results. For example: 

• Univ. of Colorado Health at Mem'l Hosp. v. Becerra, 2022 WL 2191690, at *37 (D.D.C. June 17, 2022) (ruling that retroactive employment of an estate professional does not implicate bankruptcy court jurisdiction, so it does not run afoul of [RCA], and stating that "[m]ore importantly, [RCA] does not apply to the facts of this case for another, pithier, reason: The Tenth Circuit has declared that orders authorizing retroactive employment are, as a matter of taxonomy, not nunc pro tunc, and "that the more appropriate term is 'post facto'") (quoting In re Albrecht, 233 F.3d 1258, 1260 n.4 (10th Cir. 2000)); 
• In re Mallinckrodt PLC, 2022 WL 906451 (D. Del. Mar. 28, 2022) (the bankruptcy court did not err in finding that special counsel's disclosures were adequate and that RCA does not apply to nunc pro tunc employment applications in bankruptcy);
• In re Khan, 2021 WL 4865278, at *5 (S.D. Fla. Oct. 19, 2021) ("[RCA] is different from this case for the following foundational reason: the text of the Bankruptcy Code itself gives Bankruptcy Judges the power not only to 'terminate' but also to 'annul' the automatic stay, 11 U.S.C. § 362(d), and courts repeatedly have interpreted this provision as giving Bankruptcy Judges the power to grant stay relief retroactively.");
• In re Nilhan Devs., LLC, 2021 WL 4516367, at *9 (N.D. Ga. Sept. 30, 2021) (affirming a bankruptcy court's order denying nunc pro tunc approval of postpetition financing; RCA prohibited retroactive authorization of a loan that the court would never have approved had it been timely filed because the proposed financing did not comply with section 364 of the Bankruptcy Code, and retroactive relief would have written facts into the record), aff'd, 2022 WL 3275175 (11th Cir. Aug. 11, 2022);
• In re Zvoch, 618 B.R. 734, 740 (W.D. Pa. 2020) (affirming denial of a request for nunc pro tunc approval of postpetition financing where the order approving the financing "would not reflect reality" when the need for the order arose from the debtor's failure to timely seek approval, not the court's inadvertence);
• McNeill v. Hinson, 2020 WL 8617627, at *1 (W.D.N.C. Dec. 8, 2020) (RCA prevents courts from nunc pro tunc ruling that a pleading was timely filed when it was not because doing so would revise the record to reflect a fact that did not occur);
• Merriman v. Fattorini (In re Merriman), 616 B.R. 381, 391-93 (B.A.P. 9th Cir. 2020) (stating that "[w]e do not believe that the ruling in [RCA] prohibits a bankruptcy court's exercise of the power to grant retroactive relief from stay" because Congress "expressly" gave courts the power to modify the automatic stay retroactively in section 362(d) of the Bankruptcy Code, which provides that the bankruptcy court may grant relief from the stay, "such as by terminating, annulling, modifying, or conditioning such stay");
• In re Golesis, 659 B.R. 767, 776–77 (Bankr. D. Utah 2024) ("The central holding of [RSA] is that a nunc pro tunc order cannot cure a jurisdictional defect. However, granting retroactive employment does not implicate bankruptcy court jurisdiction, so it does not run afoul of [RCA]…. More importantly, [RCA] does not apply to the facts of this case for another, pithier, reason: The Tenth Circuit has declared that orders authorizing retroactive employment are, as a matter of taxonomy, not nunc pro tunc, and "that the more appropriate term is 'post facto'") (quoting In re Albrecht, 233 F.3d 1258, 1260 n.4 (10th Cir. 2000));
• In re Player's Poker Club, Inc., 636 B.R. 811,. 828–29 (Bankr. C.D. Cal. 2022) (a bankruptcy court may approve nunc pro tunc rejection of a nonresidential real property lease; the power to retroactively approve a lease rejection does not impermissibly create jurisdiction when none existed because jurisdiction arises upon the commencement of case, is rooted in the Bankruptcy Code, does not involve revisionist history of creation of facts that never occurred, and can remedy delays that are attributable to judicial process and not unreasonable conduct of the parties);
• In re Moody, 2021 WL 4483981, at **9–10 (Bankr. N.D. Ohio Sept. 30, 2021) (stating that "a bankruptcy court order avoiding a lien attached to property a debtor no longer owns by entering an order nunc pro tunc to the petition date, or to a date upon which a debtor still owned the property, is indefensible under the Supreme Court's decision in [RCA]");
• In In re Telles, 2020 WL 2121254, at *5 (Bankr. E.D.N.Y. Apr. 30, 2020) (denying a motion for a nunc pro tunc order vacating the automatic stay prior to a state court-authorized foreclosure sale because "there was never a determination by this Court vacating the stay prior to the foreclosure sale," and noting that "a nunc pro tunc order cannot bless a state court authorized foreclosure sale where the automatic stay has deprived the state court of such jurisdiction"); and
• In re Benitez, 2020 WL 1272258, at **1–2 (Bankr. E.D.N.Y. Mar. 13, 2020) (ruling that, under RCA, "utilizing nunc pro tunc orders to approve the retention of estate professionals retroactive to some date prior to the actual date of court approval is inappropriate" and reasoning that "retroactive approval of the retention of an estate professional, whether it be nunc pro tunc, post-facto or any similar nomenclature, is not mandated under the Code or Rules").

The Eleventh Circuit weighed in on this debate as a matter of first impression in Patel. 

Patel

During the two decades preceding the Great Recession, brothers Rajesh and Mukesh Patel developed their family real-estate business into a $250 million hotel conglomerate. The brothers' businesses collapsed in 2008, however, resulting in multiple judgments being entered against the brothers. Sometime during 2008, both Rajesh and Mukesh Patel transferred substantially all of their assets to relatives, triggering bitter litigation between the by-then estranged brothers and their families. 

In 2015, the parties settled certain issues in what was characterized as a "final financial divorce" between the two families involving the transfer of various properties in an effort to divide up assets that were jointly obtained by the two families through business dealings dating back to 1981. 

In February 2016, further disagreements led the families to agree through an amended settlement agreement to arbitrate their disputes. The arbitration proceeding commenced in April 2016. 

On August 30, 2016, Rajesh Patel (the "debtor") filed a chapter 7 case in the Northern District of Georgia, and a chapter 7 trustee was appointed to administer his assets. In September 2016, the debtor's family sued Mukesh Patel's family in state court, but the parties agreed to dismiss the litigation in favor of arbitration. 

The debtor and his lawyer participated in the arbitration without informing the arbitrator that the automatic stay in the debtor's chapter 7 case precluded continuation of (or even impacted) the arbitration proceeding. Instead, they saved the automatic stay as a "poison pill" to deploy if the arbitration was not resolved in the debtor's favor. The debtor later raised no objection when Mukesh Patel's family informed the arbitrator that the automatic stay did not apply to the debtor's non-debtor family members and that Mukesh Patel's family did not intend to pursue any affirmative claims against the debtor.

After the arbitrator ruled in favor of the Mukesh Patel family, the debtor invoked his automatic stay poison pill, threatening to seek sanctions unless the Mukesh Patel family agreed that the award was void because of the stay. The Mukesh Patel family asked the arbitrator to amend the award to specify that none of the monetary damages applied to the debtor, but the debtor objected to the request as being untimely. 

The debtor later asked a state court to vacate the award, arguing that it was a flagrant violation of the automatic stay. After the Mukesh Patel family confirmed that they did not seek an award of damages against the debtor, the state court affirmed the arbitration award. 

The debtor then asked the bankruptcy court to stay the enforcement of the arbitration award against his family members because their assets were essentially his assets. The debtor also sought an award of damages, including punitive damages, because the Mukesh Patel family flagrantly and intentionally violated the automatic stay. The Mukesh Patel family responded by asking the bankruptcy court to annul the automatic stay retroactively to the date prior to entry of the arbitration award. The debtor objected, arguing that, among other things, retroactive annulment of the stay violated the Supreme Court's ruling in RCA.   

The bankruptcy court granted the Mukesh Patel family's motion to annul the automatic stay. The court reasoned that section 362(d)(1) of the Bankruptcy Code gave it statutory authority to grant relief "by terminating, annulling, modifying, or conditioning" the stay "for cause." The court acknowledged that entry of the arbitration award violated the stay because it purported to assess personal liability against the debtor. However, the court found that the debtor, rather than the Mukesh Patel family, bore responsibility for the stay violation because the debtor's actions were calculated to usurp the chapter 7 trustee's ability to liquidate his estate and to gain an unfair advantage against the Mukesh Patel family. 

The bankruptcy court rejected the debtor's argument that annulment of the stay was prohibited by RCA, explaining that the RCA decision does not pertain to its power to annul the automatic stay. See In re Patel, 642 B.R. 187, 197 n.8 (Bankr. N.D. Ga. 2022). 

On appeal by the debtor, the district court recognized that "persuasive authority" is split on a bankruptcy court's power to annul the automatic stay after RCA. However, the district court rejected the debtor's contention that the annulment was an "impermissible nunc pro tunc order" under RCA. It agreed with the bankruptcy court in this case (and nearly every other court to address the issue) that a bankruptcy court is authorized by section 362(d) to annul the stay. See In re Patel, No. 22-02651 (N.D. Ga. Aug. 4, 2023).

The debtor appealed to the Eleventh Circuit.  

The Eleventh Circuit's Ruling 

Addressing the issue as a matter of first impression, a three-judge panel of the Eleventh Circuit affirmed the district court's ruling. 

Writing for the panel, Chief U.S. Circuit Court Judge William Pryor explained that when a debtor files for bankruptcy, the district court obtains exclusive jurisdiction over the estate created on the petition date under 28 U.S.C. § 1334(e), and that jurisdiction devolves to the bankruptcy courts—"units" of the federal district courts—pursuant to standing orders of reference. He further noted that: (i) the automatic stay triggered by a bankruptcy filing under section 362(a) of the Bankruptcy Code is a fundamental debtor protection; (ii) actions violating the automatic stay are void; and (iii) the court may terminate, annul, modify, or condition the automatic stay "for cause" under section 362(d).

"Importantly," Judge Pryor wrote, "annulments [of the stay] 'grant retroactive relief from the automatic stay,' 'so as to validate actions taken during the pendency of the stay.'" Patel, 142 F.4th at 1320 (quoting In re Albany Partners, Ltd., 749 F.2d 670, 675 (11th Cir. 1984)). 

According to the Eleventh Circuit panel, RCA did not address a bankruptcy court's authority to annul the automatic stay, but instead reviewed a nunc pro tunc order of federal district court entered in an attempt retroactively to revive a Puerto Rico trial court order that was void because the trial court lost jurisdiction when the litigation was removed to the federal court. RCA, Judge Pryor explained, addressed the meaning of a statute—28 U.S.C. § 1446(d)—regulating the jurisdiction of federal district courts. That statute provides that a state court loses jurisdiction over a dispute once it has been removed to a federal court and voids any actions taken by the state court in the litigation after removal. The Supreme Court in RCA, he noted, ruled that a district court "cannot countermand that statutory loss of state jurisdiction by retroactively conferring it." Id. at 1321 (citing RCA, 140 S. Ct. at 701). 

By contrast, the Eleventh Circuit panel emphasized, the appeal before it concerns annulment of the automatic stay under section 362(d) of the Bankruptcy Code. The language of section 362(d), Judge Pryor noted, "underscores the broad and flexible power of bankruptcy courts to grant relief." Id. He further explained that, in section 362(d), "Congress used four verbs—'terminating, annulling, modifying, [and] conditioning"—to describe the bankruptcy court's authority to alter automatic stays," whereas section 1446 "grants district courts no such power in actions removed from the state court." Id.  

The Eleventh Circuit panel rejected the debtor's arguments to the contrary as "a misunderstanding of jurisdiction." According to Judge Pryor, "the jurisdictional concerns that underscored [RCA] play no role here," because the state court order affirming the arbitration award, although void to the extent that it purported to impose liability on the debtor, "was not void for want of jurisdiction over the suit" like the Puerto Rico trial court order in RCA. Id. He also explained that state and federal courts have concurrent jurisdiction over civil proceedings "related to" chapter 11 cases under 28 U.S.C. § 1334(b). "The annulment did not retroactively grant jurisdiction where there was none," Judge Pryor wrote, but instead, "it eliminated 'an impediment to the … enforcement' of the arbitration award against assets in the bankruptcy estate and under the bankruptcy court's control." Id. (citing Merriman, 616 B.R. at 394).  

According to the Eleventh Circuit panel, the debtor failed to recognize that "nunc pro tunc orders and annulments are different tools." Judge Pryor explained that the former "stem from the inherent judicial power to 'correct mistakes' or omissions in the record so that the record properly reflects the event that actually took place," whereas the latter is "a statutory power granted to bankruptcy courts by Congress, which allows them to 'grant retroactive relief from the automatic stay' and 'validate action taken' while the stay was in effect." Id. at 1321–22 (citing Rohe v. Wells Fargo Bank, N.A., 988 F.3d 1256, 1261 n.6 (11th Cir. 2021); In re Albany Partners, Ltd., 749 F.2d 670, 675 (11th Cir. 1984)). 

The Eleventh Circuit panel emphasized that the debtor's approach "would effectively nullify section 362(d) because every request for relief from the automatic stay, "be it prospective or retrospective—is an attempt to control an asset within the bankruptcy court's exclusive jurisdiction [and] … [if] that exclusive jurisdiction over a debtor's estate bars annulment of a stay, it also would bar termination or modification of the stay." Id. at 1322. Adopting the debtor's argument, Judge Pryor wrote, "would strip bankruptcy courts of key powers, granted to them by Congress, to manage the bankruptcy estate." Id.  

Outlook 

A handful of circuit courts of appeals have addressed the impact of RCA on the validity of various retroactive court orders, including the Eleventh Circuit. See In re Liebman, 2021 WL 5071845, at *1 (11th Cir. Nov. 2, 2021) (holding that RCA did not impact a challenge to orders affirming the denial of a chapter 13 debtor's motion for relief from a judgment refusing to reinstate her bankruptcy case or to retroactively stay the sale of her property). However, until Patel, neither the Eleventh Circuit nor any other circuit had considered whether annulment of the automatic stay to validate a court order that was void when entered due to the stay was somehow prohibited by the Supreme Court's ruling. Aligning itself with the majority of lower courts that have addressed the issue, the Eleventh Circuit distinguished RCA from the case before it, where the bankruptcy court annulled the automatic stay, but did not manufacture jurisdiction from whole cloth where none existed previously, in exercising its express statutory authority to grant such relief. 

If the debtor files a petition for Supreme Court review of the Eleventh Circuit's ruling (which the Court is unlikely to grant, given the absence of a circuit split on the issue), the Court will have an opportunity to consider the impact of RCA on bankruptcy court orders annulling the automatic stay.