## Facts

- Roslyn Savings Bank loaned money to Jon-Rac Associates, secured by a mortgage on commercial real property.
- With Roslyn’s consent, Jon-Rac conveyed the mortgaged property to Rhone Holdings Nominee Corp., which agreed to pay the mortgage.
- Rhone leased the property to Comcoach Corp., a tenant, subject to the bank’s mortgage.
- Rhone defaulted on mortgage payments, and Roslyn began a state-court foreclosure action against Rhone; Comcoach was not named or served.
- Comcoach later filed a Chapter 11 petition and stopped paying rent.
- Roslyn moved in bankruptcy court for relief from the automatic stay under 11 U.S.C. § 362(d)(1) and (2) to allow it to name Comcoach as a defendant in the pending foreclosure action.

## Issues

1. Whether a mortgagee with no claim against a debtor-tenant or the bankruptcy estate is a “party in interest” entitled to seek relief from the automatic stay under 11 U.S.C. § 362(d).
2. Whether the debtor-tenant’s bankruptcy filing required stay relief for the mortgagee to proceed with a foreclosure action against the nondebtor property owner/landlord.

## Decision

- The Second Circuit affirmed the denial of Roslyn’s motion for stay relief.
- Roslyn was not a “party in interest” under § 362(d) because it was not a creditor of Comcoach and held no claim against the debtor or the estate.
- Because Comcoach was not a party to the foreclosure action, the foreclosure against the nondebtor owner was not automatically stayed on that basis, so Roslyn’s asserted need for stay relief was overstated.
- The court noted that state-law remedies (including seeking a receiver for rents and profits) could protect Roslyn’s interests without requiring Roslyn to proceed against the debtor in bankruptcy.

## Legal Principles

- Standing to seek relief from the automatic stay under 11 U.S.C. § 362(d) is limited to a “party in interest,” generally meaning creditors or others holding a direct claim against the debtor or the bankruptcy estate.
- An indirect or derivative economic interest affected by a bankruptcy case does not, without a direct claim against the debtor or estate, confer “party in interest” status for § 362(d) purposes.
- A debtor’s bankruptcy does not automatically stay litigation solely between nondebtors when the debtor is not a party and the action does not seek relief against the debtor or estate property.

## Conclusion

The court held that a mortgagee seeking to add a debtor-tenant to a foreclosure against the nondebtor landlord lacked standing to request stay relief because it had no claim against the debtor or the estate, and the denial of § 362(d) relief was affirmed.


Roslyn Sav. Bank v. Comcoach Corp. (In re Comcoach Corp.), 698 F.2d 571 (2d Cir. 1983)