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Note: James Riffin (Debtor) was ordered by the Circuit Court for Baltimore County to post a standby letter of credit to ensure the restoration of Debtor's properties (the Properties), which were in violation of Maryland state groundwater regulations due to Debtor's defoliation and grading activities. The LC beneficiary, Baltimore County, Maryland (County), could not draw the LC without first obtaining a court order. However, Debtor filed for bankruptcy under Chapter 7 (liquidation), and an automatic stay on the commencement of judicial process against Debtor was imposed by U.S. Code 11 U.S.C. § 362(a).

Mark J. Friedman (Trustee), the Trustee of the bankruptcy estate, and County moved to modify the automatic stay, and sought an order to allow County to draw the LC posted by Debtor and restore the Properties itself. Debtor opposed the motion, arguing that the Properties were more valuable in their defoliated and regraded state than they would be if restored.

The U.S. Bankruptcy Court for the District of Maryland, Keir, J., granted the motion. The Judge ruled that an exception to the automatic stay, 11 U.S.C. § 362(b)(4), "excepts commencement or continuation of actions and proceedings by governmental units to enforce police or regulatory powers."

[JEB/pbl]

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