## Facts

- United States Lines, Inc. (a Chapter 11 debtor affiliated with McLean Industries) operated a worldwide shipping business whose vessels constituted property of the bankruptcy estate.
- GAC Marine Fuels Ltd., a U.K. marine-fuel supplier with its principal place of business in London, conducted substantial business with U.S. customers, including through U.S.-based activities and representatives.
- After the Chapter 11 filings triggered the automatic stay under 11 U.S.C. § 362, GAC Marine threatened to arrest, and caused the arrest of, certain debtor vessels in foreign ports to collect prepetition debts.
- The debtor sought an injunction to stop interference with estate property abroad and asked the bankruptcy court to hold GAC Marine in civil contempt for willfully violating the automatic stay.
- The court had issued a temporary restraining order, after notice and a hearing, barring interference with estate property to collect prepetition debts.
- GAC Marine opposed relief, arguing primarily that the bankruptcy court lacked personal jurisdiction over it as a foreign entity.

## Issues

1. Whether the bankruptcy court had subject-matter jurisdiction to adjudicate requests for injunctive relief and civil contempt damages based on alleged violations of the automatic stay.
2. Whether the bankruptcy court had personal jurisdiction over a foreign creditor that conducted substantial business in the United States.
3. Whether arresting the debtor’s vessels in foreign ports to collect prepetition claims violated the automatic stay and could be restrained and sanctioned through contempt.

## Decision

- The court held it had subject-matter jurisdiction over the debtor’s requests for injunctive relief and contempt-related damages arising from alleged violations of the automatic stay.
- The court held it had personal jurisdiction over GAC Marine because GAC Marine transacted business in the United States sufficient to satisfy due process under the bankruptcy system’s nationwide-contacts approach.
- The court found that GAC Marine’s vessel arrests abroad, undertaken to collect prepetition debts, interfered with estate property and violated the automatic stay.
- The court concluded it could enjoin further stay violations and enforce compliance through civil contempt, including coercive and compensatory relief.

## Legal Principles

- Enforcement of the automatic stay is a core bankruptcy function within bankruptcy jurisdiction under 28 U.S.C. §§ 1334 and 157.
- Bankruptcy courts may enforce the automatic stay and related orders through civil contempt, based on inherent judicial authority, the district court’s reference, and 11 U.S.C. § 105.
- In bankruptcy matters, personal jurisdiction over a defendant may be assessed using nationwide contacts where authorized by the federal service scheme (including Bankruptcy Rule 7004), and due process is satisfied when the defendant purposefully conducts substantial, continuous commercial activity in the United States.
- Actions taken outside the United States against property of the estate, when used to collect prepetition claims after notice of the bankruptcy case, can violate 11 U.S.C. § 362 and may be enjoined and sanctioned.

## Conclusion

The bankruptcy court exercised subject-matter and personal jurisdiction to enforce the automatic stay against a foreign creditor that caused overseas arrests of the debtor’s vessels to collect prepetition debts, and it authorized injunctive and civil contempt remedies to protect estate property and compel compliance.


In re McLean Indus., Inc. (United States Lines, Inc. v. GAC Marine Fuels Ltd.), 68 B.R. 690 (Bankr. S.D.N.Y. 1986)