In Kleidman v. Pearlman (In re Pearlman), BAP No. CC-26-1005-LSG (9th Cir. BAP June 22, 2026), the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) held that the creditor’s post-petition prosecution of a fraudulent transfer action against a non-debtor spouse violates the automatic stay under 11 U.S.C. §362(a)(1), which halts the commencement or continuation of any judicial, administrative, or other action or proceeding against the debtor that could have been brought before the bankruptcy filing, or seeks to recover a claim against the debtor that arose before the filing. The BAP stated that the action seeks to recover a claim against the debtor even though it is nominally directed at a non-debtor transferee.
For years, Peter Kleidman sought to enforce his prepetition judgment against debtor Jordan Gene Pearlman (“Debtor”) for a breach of guaranty agreement. In his efforts, Kleidman filed two complaints (a complaint in New York and a complaint in California) against Debtor and Debtor’s wife (“Spouse”), asserting that Debtor fraudulently executed a premarital agreement to shield community property from his creditors’ reach and that Spouse was the recipient of a fraudulent transfer. On September 11, 2025, while the lawsuits were pending, Debtor filed a Chapter 7 petition, upon which Kleidman received notice of the bankruptcy filing. Notwithstanding his receipt of notice of the bankruptcy case, Kleidman filed an ex parte motion in the New York action, in which he requested leave to serve Spouse with process using alternative means and an extension of the deadline to effectuate service on Spouse. In the motion, Kleidman was silent with respect to the fact that Debtor had filed for bankruptcy protection and did not specify that he intended to proceed only against Spouse. As a result, unaware of the bankruptcy, the New York Court granted the motion. Spouse was subsequently served on October 28, 2025.
On November 6, 2025, Debtor filed a motion to hold Kleidman in contempt for violating the automatic stay and requested an award of attorneys’ fees and costs incurred as a result of the violation. Only after that motion was filed, on November 13, 2025, did Kleidman inform the New York court of that Debtor had filed for bankruptcy and that the New York action should be stayed. Kleidman also opposed the motion for contempt, arguing that the proceeding against the non-filing spouse did not violate the stay as he intended to proceed against her in state court only. Kleidman further asserted that Debtor had not established any damages beyond attorneys’ fees and costs and was not entitled to any of award of damages under 11 U.S.C. 362(k)(1). He also argued that his counsel’s rate was unreasonable. The bankruptcy court disagreed on all points, found a willful stay violation, and awarded Debtor $5,880 in fees and costs. Kleidman appealed.
On appeal, the BAP affirmed in full. Relying on its recent decision in Koeberer v. Cal. Bank of Com. (In re Koeberer), 632 B.R. 680 (9th Cir. BAP 2021), the BAP reiterated that a fraudulent transfer action is, at its core, an action “to recover a claim against the debtor,” because a transferee’s liability is entirely derivative of the debtor’s own intent in making the transfer, and the fraudulent transfer claim itself becomes property of the estate upon filing. The BAP drew a distinction between fraudulent transfer defendants and guarantors: a guarantor’s liability arises from an independent contractual promise to answer for the debt, whereas the transferee in a fraudulent transfer action has no such independent obligation. Because Kleidman’s claims against Spouse fell into the former category, and because Kleidman continued to prosecute those claims for nearly two months after receiving notice of the bankruptcy, the BAP held that Kleidman violated both Sections 362(a)(1) and 362(a)(3) of the Bankruptcy Code. The BAP emphasized that once a creditor has notice of a bankruptcy filing, the burden shifts to the creditor either to stop or to seek relief from the bankruptcy court before proceeding; a creditor who instead presses forward based on its own reading of the stay does so at its own risk.
Turning to damages, the BAP rejected Kleidman’s argument that attorneys’ fees are recoverable under Section 362(k)(1) only if the debtor also proves some other, separate compensable injury. Relying on the Ninth Circuit’s en banc decision in Am.’s Servicing Co. v. Schwartz-Tallard (In re Schwartz-Tallard), 803 F.3d 1095 (9th Cir. 2015), the Panel explained that the statute’s use of the word “including” shows that Congress treated attorneys’ fees as a form of actual damages in their own right, not as a component requiring independent proof of harm. The BAP also noted that fee awards are mandatory once a willful violation is established, and that this rule serves an important policy purpose: without the ability to recover fees, many debtors would lack the financial means or incentive to enforce their stay rights in the first place. Finally, the BAP found no abuse of discretion in the bankruptcy court’s reliance on its own knowledge of customary local billing rates in finding Spector’s $490 hourly rate reasonable.
For practitioners, Kleidman is a reminder that creditors’ counsel must treat notice of a bankruptcy filing as a trigger to pause and reassess, even where the pending litigation nominally targets a non-debtor. Continuing to litigate against a transferee spouse, family member, or affiliated entity without first confirming whether the underlying claim belongs to the estate carries real exposure, particularly where the claim is a fraudulent transfer claim rather than one based on independent liability, such as a guaranty. Debtor’s counsel, on the other hand, should take note that a stay violation need not cause any additional injury beyond the cost of enforcement; the fees incurred bringing the violation to the bankruptcy court’s attention are themselves recoverable as actual damages under Section 362(k)(1).
Kleidman ultimately reinforces two related principles: the automatic stay’s reach extends further than the named parties to a lawsuit when the underlying claim belongs to the debtor’s estate, and creditors who guess wrong about the stay’s scope bear the cost of that mistake in the form of the debtor’s attorneys’ fees.