By: David P. Griffin
St. John's Law Student
American Bankruptcy Law Review Staff
Recently, in Weisel v. Dominion Peoples Gas Company (In re Weisel), a Pennsylvania district court held that a utility company could terminate a chapter 13 debtors’ gas service after the debtors defaulted on their post-petition contract, without seeking either leave of the court or relief from the automatic stay. The debtors listed in their schedules an unsecured debt owed to the gas utility company for pre-petition services. As a result of the bankruptcy petition, the utility company closed the debtors’ pre-petition account. At the same time the utility opened a new post-petition account for the debtors, after the debtors posted a deposit. The utility continued to provide service under the contract until the debtors amassed a post-petition delinquency. After the post-petition default, the utility company provided proper notice to the debtors pursuant to state law and terminated gas utility services, without first seeking court approval. The bankruptcy court held that the gas company had not violated section 362(d) of the Bankruptcy Code by terminating debtors’ post-petition gas service without obtaining relief from the automatic stay because the debtors had failed to provide adequate assurance of payment within the twenty day period set forth in section 366(b). On appeal, the district court held that the gas utility company was permitted to terminate service, albeit for different reasons than the bankruptcy court. Specifically, the district court allowed the utility to unilaterally terminate gas service because section 366 allows a utility to terminate service to debtors who have posted adequate assurance, but have subsequently failed to make post-petition payments on the utility service.