Facts: An owner of a commercial property filed for chapter 7 bankruptcy protection as the property was contaminated by hazardous waste and nonoperational. An automatic stay was placed on the property for the duration of the owner’s bankruptcy. A trustee was appointed by the court to liquidate the owner’s assets under the bankruptcy. The trustee abandoned the contaminated property as no funds were available to rehabilitate it and a lender holding a first trust deed on the property foreclosed on its interest during the bankruptcy proceedings.

Claim: The lender claimed the foreclosure was necessary since there were no funds available to render the property operable as the property was contaminated with hazardous waste.

Counter claim: The owner sought to retroactively invalidate the foreclosure, claiming the lender improperly foreclosed since the automatic stay was in effect through the duration of the owner’s bankruptcy.

Holding: A bankruptcy appeals court held the foreclosure was invalid since the owner’s stay protected the property under the owner’s bankruptcy declaration throughout the bankruptcy proceedings, regardless of the trustee’s abandonment of the property. [In re Gasprom, Inc. (February 25 2013) _BR_]