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UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

FORT LAUDERDALE DIVISION

www.flsb.uscourts.gov

IN RE: 

LIBERTY POWER HOLDINGS, LLC, Case No.: 21-13797-SMG

Chapter 11 

Debtor. 

____________________________________/ 

THE ILLINOIS ATTORNEY GENERAL’S MOTION FOR AN ORDER DECLARING

THE AUTOMATIC STAY INAPPLICABLE TO THE ILLINOIS ATTORNEY

GENERAL’S ACTION, OR IN THE ALTERNATIVE,

FOR RELIEF FROM THE AUTOMATIC STAY

The Illinois Attorney General’s Office respectfully requests the entry of an order declaring 

that the automatic stay under 11 U.S.C. § 362 is inapplicable to the Illinois Attorney General’s 

consumer protection action that is pending before the Chancery Division of the Circuit Court of 

Cook County, Illinois with a case style People of the State of Illinois v. Liberty Power Holdings 

LLC, Case. No. 2020 CH 1954 (“Illinois state court action”). In the alternative, the Illinois Attorney 

General requests that this Court grant the Illinois Attorney General relief from the automatic stay 

to pursue any and all relief against the Debtor in the Illinois state court action. In support thereof, 

the Illinois Attorney General states as follows: 

I. Jurisdiction and Venue

This Court has jurisdiction to enter the relief requested by this motion under 28 U.S.C. §§

157 and 1334. Venue in this Court is proper under 28 U.S.C. §§ 1408 and 1409. This is a core 

proceeding as defined in 28 U.S.C. § 157(b)(2)(G). 

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II. Background

On March 19, 2020, after conducting an investigation into Liberty Power Holdings LLC 

(the “Debtor”) for unfair and deceptive acts and practices, the Illinois Attorney General brought a 

consumer protection action against Debtor and on behalf of the People of the State of Illinois. 

The Illinois Attorney General alleges Debtor engaged in unfair and deceptive trade 

practices designed to induce consumers to purchase alternative retail electric supply from the 

Debtor, in violation of the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 5051/1 

et seq., and the Illinois Telephone Solicitations Act, 815 ILCS 413/1 et seq. Debtor is an alternative 

retail electric supplier. Under Illinois law, an alternative retail electric supplier may solicit 

consumers to buy their electric supply from private companies while still receiving electricity 

delivery from their public utility. See Illinois Electric Service Customer Choice and Rate Relief 

Law of 1997, 220 ILCS 5/16-101 et seq. Debtor solicited consumers using a series of deceptive 

and fraudulent misrepresentations, including but not limited to: representations that that Illinois 

consumers would save money by switching their electric supply to Debtor; that Illinois consumers 

would receive “price protection” by making such a switch; that Debtor was affiliated with Illinois 

public utilities; and that Debtor was affiliated with fictitious state-sponsored programs. In fact, 

after lying to consumers about its services in order to get them to agree to switch, Debtor

consistently charged more than the consumers’ public utilities. A copy of the operative complaint 

is attached as Ex. A. 

The Illinois Attorney General seeks multiple remedies against Debtor, including 

preliminary and permanent injunctive relief, restitution, disgorgement, rescission of contracts 

entered into between Debtor and Illinois consumers, attorneys’ fees, and civil penalties. 

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On July 21, 2020, Debtor’s motion to dismiss was denied on all but one count. The parties 

are currently engaged in active discovery in the Illinois state court action. On April 20, 2021, 

Debtor commenced the instant case by filing a voluntary petition for relief under Chapter 11 of 

Title 11 of the U.S. Code (the “Bankruptcy Code”). 

After Debtor’s Suggestion of Bankruptcy was filed, the Illinois Attorney General’s Office 

filed a motion to pause the discovery schedule in the state court action so that the parties could 

discuss the impact of the bankruptcy filing on the state court action. The Circuit Court of Cook 

County denied the motion and directed the Illinois Attorney General’s Office to seek clarification 

from this Court to confirm that the automatic bankruptcy stay does not apply to the Illinois 

Attorney General. As a result, the Illinois Attorney General now brings this motion. 

III. Argument

A. The Police and Regulatory Power Exception under 11 U.S.C. § 362(b)(4) Applies to 

the Illinois Attorney General’s State Court Action Against the Debtor

The Illinois Attorney General is authorized to enforce the Illinois Consumer Fraud and 

Deceptive Business Practices Act (“Consumer Fraud Act”), 815 ILCS 505/1 et seq., to advance 

the public policy of protecting consumers from unfair or deceptive acts or practices. The Illinois 

Attorney General’s claims under the Consumer Fraud Act, including those in its case against the 

Debtor, are exercises of the Illinois Attorney General’s police and regulatory powers and thus 

should be excepted from the automatic stay under 11 U.S.C. § 362(a)(1). 

It is well-established that the filing of a bankruptcy does not operate as a stay “of the 

commencement or continuation of an action or proceeding by a governmental unit...to enforce 

such governmental unit’s or organization’s police and regulatory power, including the enforcement 

of a judgment other than a money judgment, obtained in an action or proceeding by the 

governmental unit to enforce such governmental unit’s or organization’s police or regulatory 

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power.” 11 U.S.C. § 362(b)(4); see Bd. of Governors of Fed. Reserve Sys. v. MCorp Fin., Inc., 502 

U.S. 32, 39-40 (1991) (citing plain language of bankruptcy code in holding that Board of 

Governors of Federal Reserve System’s action fell “squarely within § 362(b)(4), which expressly 

provides that the automatic stay will not reach proceedings to enforce a ‘governmental unit’s police 

or regulatory power’”); Brock v. Rusco Industries, Inc. 842 F.2d 270, 273 (11th Cir. 1988) (action 

by Secretary of Labor to enforce the Fair Labor Standards Act fell within exception to automatic 

stay as valid exercise of police power); In re Guardia, 522 B.R. 734, 735 (Bankr. S.D. Fla. 2014)

(finding that “case law strongly support[ed]” Attorney General of Florida’s claim that its lawsuit 

against debtor for violations of that state’s consumer protection laws fell within Section 362(b)(4) 

exception).

There is strong precedent that the exception applies to lawsuits filed by governmental units, 

including state Attorneys General, alleging violations of consumer protection statutes. In re 

Guardia, 522 B.R. at 735; In re Dolen, 265 B.R. 471, 480-81 (Bankr. M.D. Fla. 2001) (holding 

“there can be no question here that the automatic stay does not preclude the [Federal Trade] 

Commission from prosecuting its action against the debtor in district court”); In re Steffy, 494 B.R. 

574, 585 (Bankr. N.D. Ga. 2012) (finding that consumer protection action filed by the State of 

Arkansas to enforce laws and to protect its citizens fell within the exception of Section 362(b)(4)); 

In re Nelson, 240 B.R. 802, 805-07 (Bankr. D. Me. 1999) (holding that the State of Maine’s lawsuit 

against the debtor for violations of Maine’s Unfair Trade Practices Act and the Consumer 

Solicitations Sales Act was within Section 362(b)(4)’s exception); see also Matter of Towers, 162 

F.3d 952, 956 (7th Cir. 1998) (finding that “state law-enforcement actions are outside the scope of 

the [automatic] stay to begin with” in reference to the Illinois Attorney General’s action to enforce 

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state consumer protection laws and therefore it was “unnecessary” for the Attorney General to 

petition the bankruptcy court for a lift from the stay). 

Courts interpreting the bankruptcy code look to its legislative history, which illustrates that 

“Congress intended this exception to apply to suits by governmental units ‘to prevent or stop 

violation of fraud, environmental protection, consumer protection, safety, or similar regulatory 

laws.’” In re Dolen, 265 B.R. at 481 (citing S.Rep. No. 989, 96th Cong., 2d Sess. 52, reprinted in 

1978 U.S.C.C.A.N. 5787, 5838). The proper inquiry for courts in determing whether the exception 

applies is whether the action “relates to a matter of public safety and health or primarily to the 

protection of the government’s pecuniary interest in the debtor’s property.” In re Dolen, 265 B.R. 

at 481 quoting Berg v. Good Samaritan Hospital, 198 B.R. 557, 561 (9th Cir. BAP 1996); see also

In re Steffy 494 B.R. at 585.

The Illinois Attorney General’s action against the Debtor falls squarely within the police 

and regulatory power exception and undeniably functions to advance public safety by protecting 

the public from fraud. The Illinois Attorney General is a governmental unit, as defined by the 

bankruptcy code. 11 U.S.C. § 101(27); In re Dolen, 265 B.R. at 480 (“governmental unit” under 

Section 362(b)(4) is not limited to government units exercising control under the Chemical 

Weapons Doctrine). In the state court action, the Illinois Attorney General has alleged that the 

Debtor lied to Illinois consumers by falsely asserting that consumers would save money if they 

switched when, in fact, Debtor charged more than the price offered by the public utility. Debtor 

falsely touted its product as a something that would “protect” consumers from price increases 

when, in fact, Debtor intended to and did charge consumers more than they would have paid if 

they remained with their utility. And, in some instances, Debtor induced consumers into switching 

their electrical supply by suggesting that they were operating or administering a government 

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program or that they were affiliated with the consumer’s public utility. In bringing the state court 

consumer protection action, the Illinois Attorney General seeks to protect Illinois consumers from 

the Debtor’s fraudulent scheme by, among other things, obtaining an injunction preventing further 

operation of the scheme and recovering equitable relief such as restitution on behalf of consumers 

harmed by the Debtor, along with civil monetary penalties. The Illinois Attorney General is not 

pursuing the matter for his own pecuniary interest or to adjudicate private rights. 

In sum, the Illinois Attorney General’s Illinois state court action falls squarely within the 

“police and regulatory power exception” found in § 362(b)(4). The Debtor’s Chapter 11 filing does 

not stay the Illinois Attorney General’s Illinois state court action or any enforcement of a judgment, 

except for the enforcement of a money judgment against the Debtor. See In re Dolen, 265 B.R. at 

480 (explaining that the exception allows the governmental unit to “engage in discovery, 

participate at trial to obtain an adjudication of its claims on the merits, and, if the debtor is found 

to have engaged in illegal conduct, determine and fix restitution damages for that conduct”).

Furthermore, any money judgment the Illinois Attorney General obtains can form the basis of the 

claim the Illinois Attorney General might file in this case. In re Guardia, 522 B.R. at 736. 

IV. Relief Requested

By this motion, the Illinois Attorney General requests the entry of an order declaring that 

the automatic stay under 11 U.S.C. § 362 is inapplicable to the Illinois state court action, or in the 

alternative, granting the Illinois Attorney General relief from the automatic stay, to pursue any and 

all relief against the Debtor in the Illinois state court action. In addition, pursuant to Bankruptcy 

Rule 4001(a)(3), the Illinois Attorney General requests that the Court waive the fourteen day stay 

of the effect of an order granting this motion, in the event the Court deems it necessary to grant 

relief from the automatic stay. 

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Respectfully submitted,

Dated: June 16, 2021 THE PEOPLE OF THE STATE OF ILLINOIS,

by KWAME RAOUL, 

Attorney General of the State of Illinois

BY: /s/ Michele Casey

Andrew Dougherty

Michele Casey

Ronak Shah

Amanda Palmer

Daniel Edelstein

100 West Randolph Street, 12th Floor

Chicago, Illinois 60601

Phone: (708) 872-7882

andrew.dougherty@illinois.gov

michele.casey@illinois.gov

ronak.shah@illinois.gov

amanda.palmer@illinois.gov

daniel.edelstein@illinois.gov

Attorney No: 99000

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