Docstoc

Bankruptcy Attorneys in Brunswick Ga - DOC

Document Sample
Bankruptcy Attorneys in Brunswick Ga - DOC Powered By Docstoc
					                          GETTING YOUR CASE OUT OF BANKRUPTCY:
                        Motions for Relief from the Automatic Stay under BAPCPA
                              and for Cause Under 11 U.S.C. Sec. 362(d)(1)
                                                     By
                                             Ivan J. Reich, Esq.
                                         Becker & Poliakoff, P.A.
                                             Ft. Lauderdale, FL

         Upon filing a bankruptcy case, whether voluntary or involuntary, the automatic stay under 11
U.S.C. § 362 is immediately put into effect without court order or notice to any parties. In general, the
purposes of the automatic stay are: 1) to preserve the existing and growing concern of the debtor by
preventing creditors from attacking, attaching, or obtaining assets of the debtor, and 2) to promote equality
among existing creditors.

         In its most basic conceptual terms, the automatic stay provided by Section 362 is an "extremely
broad" injunctive provision that "should apply to almost any type of formal or informal action against the
debtor or property of the estate." The stay applies only to claims that arose before the commencement of the
bankruptcy case; it does not apply to post-petition claims. Holland Am. Ins. Co. v. Succession of Roy, 777
F2d 992, 995-996 (5th Cir. 1985). In some cases, the automatic stay may even impose an affirmative duty
to act upon a creditor, rather than simply to refrain from certain conduct. Wariner v. First State Bank (In re
Wariner), 16 BR 216, 218 (Bankr. ND Tex. 1981). As an example, if a judgment creditor continued to
receive garnished funds from the debtor after the debtor filed a petition under the Bankruptcy Code, a court
would probably conclude that the automatic stay had been violated. In such a case, the automatic stay
imposes a duty upon the creditor to terminate the garnishment procedures. Timothy E. Travers, et. al., eds.,
1A Bankruptcy Service Lawyers Edition § 5A:12 (1990).

          Relief from the automatic stay may be sought under two circumstances. First, a creditor may seek
to have the automatic stay terminated or modified so that it may take some other action adverse to the
debtor, for example, in a state court lawsuit. Second, relief may be sought to the extent that the stay
prevents a creditor from asserting rights against property of the estate or of the debtor or property in the
possession of the debtor. If a creditor believes that it qualifies for relief from the stay, it must seek such
relief by filing a motion under § 362(d). Such a motion is a contested matter, rather than an adversary
proceeding.

          Section 362(e) provides that the court may hold a preliminary hearing followed by a final hearing
on a motion for relief from the stay, or may consolidate the two and just hold a single hearing. Except in
particularly complex matters, as a practical matter the courts tend to hold a single hearing, but local
practices vary. The court must hold a preliminary hearing within 30 days after a motion for stay relief is
filed, unless the movant agrees otherwise. If the initial hearing is a preliminary hearing, then a final hearing
must be concluded by no later than 30 days after the conclusion of the preliminary hearing, unless the
parties agree otherwise or the court finds "compelling circumstances." These provisions are intended to
provide a prompt resolution of motions for relief from stay, recognizing that creditors who are entitled to
relief from the stay often face substantial risk and imminent harm: Justice delayed may be justice denied.
But as you will see if you read § 362(e), there is some room in the statute for delay, and while motions for
relief from the stay are usually decided relatively promptly, that is not always the case.

           There are cases where a creditor will seek relief from the automatic stay on a very expedited basis.
While counsel would be well advised not to invoke emergency proceedings unless there is a legitimate
emergency (the fact that a client wants immediate relief is not, by itself, an emergency), where immediate
relief is necessary to avoid irreparable harm, courts are often willing to give expedited consideration, and
counsel should proceed under the procedures set forth in § 362(f) and Bankruptcy Rule 4001(2).

          As all bankruptcy practitioners are undoubtedly aware, the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (BAPCPA) was signed into law on April 20, 2005. Most provisions of
the new law became effective at 12:01 a.m. on October 17, 2005, and there are many terms that will greatly
affect the day-to-day business of the normal bankruptcy attorney. Some of the most important of these deal
with the automatic stay. Those changes to the law will be identified by line strikes and italics throughout
the statutory section of this outline, and will contain comments as they arise. So while the primary purpose
of this article is to deal with “cause” as a basis for stay relief under 362(d)(1), the new changes to the
Bankruptcy Code, afford lawyers with several new avenues for “getting their cases out of bankruptcy”
under Section 362, beyond the traditional methods set forth in 362(d).

I.       The statute providing for the automatic stay, 11 U.S.C. § 362, is divided into several parts as
follows:

A.       362(a) lists all actions stayed by filing the bankruptcy petition.

          Section 362(a) of the Bankruptcy Code establishes the automatic stay, which is very broad and
goes into effect when debtors file a bankruptcy petition. The automatic stay bars action against the debtor
or the debtor’s property even if the creditor is unaware of the bankruptcy filing. Thus, creditors are
forbidden from acting against or even contacting a debtor who has filed a bankruptcy petition without first
obtaining relief from the automatic stay. The automatic stay is a cornerstone of the bankruptcy process, and
much litigation occurs every year involving alleged violations of the automatic stay and requests for relief
from the automatic stay. In addition to proscribing certain conduct, the automatic stay precludes numerous
parties from commencing actions against the debtor or the debtor's property. Specifically, the petition
"operates as a stay, applicable to all entities." The Bankruptcy Code broadly defines the term "entity" to
include any "person, estate, trust, governmental unit, and United States Trustee." Section 101(15). Section
362(a) states:

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of
    this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970,
    operates as a stay, applicable to all entities, of—

         (1) the commencement or continuation, including the issuance or employment of process, of a
             judicial, administrative, or other action or proceeding against the debtor that was or could
             have been commenced before the commencement of the case under this title, or to recover a
             claim against the debtor that arose before the commencement of the case under this title;

         (2) the enforcement, against the debtor or against property of the estate, of a judgment obtained
             before the commencement of the case under this title;

         (3) any act to obtain possession of property of the estate or of property from the estate or to
             exercise control over property of the estate;

         (4) any act to create, perfect, or enforce any lien against property of the estate;

         (5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that
             such lien secures a claim that arose before the commencement of the case under this title;

         (6) any act to collect, assess, or recover a claim against the debtor that arose before the
             commencement of the case under this title;

         (7) the setoff of any debt owing to the debtor that arose before the commencement of the case
             under this title against any claim against the debtor; and

         (8) the commencement or continuation of a proceeding before the United States Tax Court
             concerning the debtor a corporate debtor's tax liability for a taxable period the bankruptcy
             court may determine or concerning the tax liability of a debtor who is an individual for a
             taxable period ending before the date of the order for relief under this title.




                                                       2
                  TAX PROCEEDINGS

                  BACCPA created a new proceeding stay in § 362(a)(8), staying tax court proceedings
                  concerning a corporate debtor's liability for a taxable period that the bankruptcy court
                  may determine or concerning the tax liability of an individual debtor for a taxable period
                  ending before the date of the order for relief.

                  a.        Scope of the automatic stay does not extend to non-debtor parties

                            Although the automatic stay obviously protects the debtor, it does not cover
                            distinct, non-debtor legal entities such as guarantors, affiliated corporations,
                            partners in debtor partnerships, or co-defendants in ongoing litigation. Crumpler
                            v. Westel Seed Co., Inc. (In re Southside Lawn & Garden/Suffolk Yard Guard),
                            115 BR 79, 81 (Bankr. ED Va. 1990) (the stay does not protect debtor's general
                            partners from creditors' claims). Thus, those parties that have not joined the
                            bankruptcy case with their liabilities and assets are not protected by the
                            Bankruptcy Code. Venture Prop., Inc. v. Norwood Group, Inc. (In re Venture
                            Prop., Inc.), 37 BR 175, 177 (Bankr. DNH 1984). It is worth recognizing,
                            however, that a bankruptcy court has the power to enjoin actions against non-
                            debtor entities that threaten the estate's administration under Bankruptcy Code
                            Section 105 and Federal Rule of Bankruptcy Procedure 7065. See In re Energy
                            Coop., Inc., 886 F2d 921, 929 (7th Cir. 1989); AH Robbins v. Piccinin (In re
                            AH Robbins Co.), 7888 F2d 994, 1003 (4th Cir.), cert. denied, 479 S. Ct. 876
                            (1986); Chase Manhattan Bank v. Third Eighty-Ninth Assocs. (In re Third
                            Eighty-Ninth Assocs.), 138 BR 144, 146-149 (SDNY 1992); Myerson & Kuhn
                            v. Brunswick Assocs. Ltd. partnership (In re Myerson & Kuhn), 121 BR 145,
                            154 (Bankr. SDNY 1990). In such a case, the four requirements for injunctive
                            relief must be satisfied to persuade the court to, effectively extend the automatic
                            stay's protection, to those non-debtors. Marley Orchards Income Fund I, Ltd.
                            Partnership v. Walker (In re Marley Orchards Income Fund I, Ltd. Partnership),
                            120 BR 566, 568 (Bankr. ED Wash. 1990). The debtor must show (1) the danger
                            of irreparable, imminent harm to the bankruptcy estate or the debtor's ability to
                            reorganize if the injunction does not issue; (2) the reasonable likelihood of a
                            successful reorganization; (3) the threatened injury to the movant outweighs the
                            threatened harm to the party who would be restrained; and (4) the balancing of
                            the public interest in successful bankruptcy reorganizations with other
                            competing social interests. Id.

B.       362(b) lists all the actions that are not stayed, the "exceptions" to the automatic stay.

         Most attorneys were already somewhat familiar with the automatic stay provisions set forth in 11
U.S.C. § 362(a). But what § 362(a) giveth to debtors, § 362(b), § 362(c) and § 362(d) can taketh away.
Among the main changes enacted by BACCPA is the creation of additional exceptions to the operation of
the automatic stay under Section 362. These new exceptions complicate what was formerly a very broad
application of the automatic stay and limit, or in certain circumstances even deny, a debtor the use of the
automatic stay, specifically a debtor who has filed successive bankruptcies. The objective of many of these
new provisions is to address the problem of “serial filers,” or debtors who file multiple bankruptcy cases,
and reduce the number and frequency of bankruptcy filings that are filed merely for the purpose of delay or
another nefarious reason. Section 362(b) states:

(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section
5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—

         (1) under subsection (a) of this section, of the commencement or continuation of a criminal action
             or proceeding against the debtor;




                                                        3
(2) under subsection (a) of this section--
(A) of the commencement or continuation of an action or proceeding for--
(i) the establishment of paternity; or
(ii) the establishment or modification of an order for alimony, maintenance, or support; or
(B) of the collection of alimony, maintenance, or support from property that is not property of the
estate;

(2) under subsection (a)—

         (A) of the commencement or continuation of a civil action or proceeding—

                  (i)       for the establishment of paternity;

                  (ii)      for the establishment or modification of an order for domestic support
                            obligations;

                  (iii)     concerning child custody or visitation;

                  (iv)      for the dissolution of a marriage, except to the extent that such
                            proceeding seeks to determine the division of property that is property
                            of the estate; or

                  (v)       regarding domestic violence;

         (B) of the collection of a domestic support obligation from property that is not property
             of the estate;

         (C) with respect to the withholding of income that is property of the estate or property of
             the debtor for payment of a domestic support obligation under a judicial or
             administrative order or a statute;

         (D) of the withholding, suspension, or restriction of a driver's license, a professional or
             occupational license, or a recreational license, under State law, as specified in
             section 466(a)(16) of the Social Security Act;

         (E) of the reporting of overdue support owed by a parent to any consumer reporting
             agency as specified in section 466(a)(7) of the Social Security Act;

         (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the
             Social Security Act or under an analogous State law; or

         (G) of the enforcement of a medical obligation, as specified under title IV of the Social
             Security Act;

              DOMESTIC RELATIONS EXCEPTION

                  Several changes were made to automatic stay provisions in § 362 that impact
                  domestic support creditors. Under the exceptions to the automatic stay, new §
                  362(b)(2) replaced the old subsection (2), expanding the provision to except
                  from the stay those items listed above.

(3) under subsection (a) of this section, of any act to perfect, or to maintain or continue the
    perfection of, an interest in property to the extent that the trustee's rights and powers are
    subject to such perfection under section 546(b) of this title or to the extent that such act is
    accomplished within the period provided under section 547(e)(2)(A) of this title;




                                              4
(4) under paragraph (1), (2), (3), or (6) of subsection (a) of this section, of the commencement or
    continuation of an action or proceeding by a governmental unit or any organization exercising
    authority under the Convention on the Prohibition of the Development, Production,
    Stockpiling and Use of Chemical Weapons and on Their Destruction, opened for signature on
    January 13, 1993, 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 power;

         In order to qualify as a regulatory power under Section 362(b)(4), the proceeding must
         satisfy either of two tests: (1) under the pecuniary purpose test, the court must determine
         whether the government's proceeding relates primarily to protection of the government's
         pecuniary interest in the debtor's property; (2) under the public policy test, the court must
         distinguish between proceedings aimed at effectuating public policy and those aimed at
         adjudication of private rights. See Eddleman v. United States, 923 F2d 782, 791 (10th
         Cir. 1991).

         Under the first test, the government's action must represent a direct application of the
         government's regulatory powers, as opposed to merely obtaining a financial gain for the
         government or group of citizens. See Poule v. Registrar of Contractor (In re Poule), 91
         BR 83, 86 (9th Cir. Bankr. 1988). Under the second test, the government action must
         advance a policy of the statute at issue, as opposed to simply adjudicating private rights
         between the parties to the proceeding. See In re Draughon Training Inst., Inc. 119 BR
         921, 925 (Bankr. WD La. 1990).

(5) [Repealed. Pub.L. 105-277, Div. I, Title VI, § 603(1), Oct. 21, 1998, 112 Stat. 2681-886]

(6) under subsection (a) of this section, of the setoff by a commodity broker, forward contract
    merchant, stockbroker, financial institutions financial participant, or securities clearing
    agency of any mutual debt and claim under or in connection with commodity contracts, as
    defined in section 761 of this title, forward contracts, or securities contracts, as defined in
    section 741 of this title, that constitutes the setoff of a claim against the debtor for a margin
    payment, as defined in section 101, 741, or 761 of this title, or settlement payment, as defined
    in section 101 or 741 of this title, arising out of commodity contracts, forward contracts, or
    securities contracts against cash, securities, or other property held by, pledged to, under the
    control of, or due from such commodity broker, forward contract merchant, stockbroker,
    financial institutions , financial participant, or securities clearing agency to margin,
    guarantee, secure, or settle commodity contracts, forward contracts, or securities contracts;

(7) under subsection (a) of this section, of the setoff by a repo participant or financial participant,
    of any mutual debt and claim under or in connection with repurchase agreements that
    constitutes the setoff of a claim against the debtor for a margin payment, as defined in section
    741 or 761 of this title, or settlement payment, as defined in section 741 of this title, arising
    out of repurchase agreements against cash, securities, or other property held by, pledged to,
    under the control of, or due from such repo participant or financial participant to margin,
    guarantee, secure or settle repurchase agreements;

(8) under subsection (a) of this section, of the commencement of any action by the Secretary of
    Housing and Urban Development to foreclose a mortgage or deed of trust in any case in
    which the mortgage or deed of trust held by the Secretary is insured or was formerly insured
    under the National Housing Act and covers property, or combinations of property, consisting
    of five or more living units;

(9) under subsection (a), of—

    (A) an audit by a governmental unit to determine tax liability;



                                              5
    (B) the issuance to the debtor by a governmental unit of a notice of tax deficiency;

    (C) a demand for tax returns; or

    (D) the making of an assessment for any tax and issuance of a notice and demand for
        payment of such an assessment (but any tax lien that would otherwise attach to property
        of the estate by reason of such an assessment shall not take effect unless such tax is a debt
        of the debtor that will not be discharged in the case and such property or its proceeds are
        transferred out of the estate to, or otherwise revested in, the debtor).

(10) under subsection (a) of this section, of any act by a lessor to the debtor under a lease of
     nonresidential real property that has terminated by the expiration of the stated term of the
     lease before the commencement of or during a case under this title to obtain possession of
     such property;

(11) under subsection (a) of this section, of the presentment of a negotiable instrument and the
     giving of notice of and protesting dishonor of such an instrument;

(12) under subsection (a) of this section, after the date which is 90 days after the filing of such
     petition, of the commencement or continuation, and conclusion to the entry of final judgment,
     of an action which involves a debtor subject to reorganization pursuant to chapter 11 of this
     title and which was brought by the Secretary of Transportation under section 31325 of title 46
     (including distribution of any proceeds of sale) to foreclose a preferred ship or fleet mortgage,
     or a security interest in or relating to a vessel or vessel under construction, held by the
     Secretary of Transportation under section 207 or title XI of the Merchant Marine Act, 1936,
     or under applicable State law;

(13) under subsection (a) of this section, after the date which is 90 days after the filing of such
     petition, of the commencement or continuation, and conclusion to the entry of final judgment,
     of an action which involves a debtor subject to reorganization pursuant to chapter 11 of this
     title and which was brought by the Secretary of Commerce under section 31325 of title 46
     (including distribution of any proceeds of sale) to foreclose a preferred ship or fleet mortgage
     in a vessel or a mortgage, deed of trust, or other security interest in a fishing facility held by
     the Secretary of Commerce under section 207 or title XI of the Merchant Marine Act, 1936;

(14) under subsection (a) of this section, of any action by an accrediting agency regarding the
     accreditation status of the debtor as an educational institution;

(15) under subsection (a) of this section, of any action by a State licensing body regarding the
     licensure of the debtor as an educational institution;

(16) under subsection (a) of this section, of any action by a guaranty agency, as defined in section
     435(j) of the Higher Education Act of 1965 or the Secretary of Education regarding the
     eligibility of the debtor to participate in programs authorized under such Act;

(17) • (17) under subsection (a) of this section, of the setoff by a swap participant, of any mutual
     debt and claim under or in connection with any swap agreement that constitutes the setoff of a
     claim against the debtor for any payment due from the debtor under or in connection with any
     swap agreement against any payment due to the debtor from the swap participant under or in
     connection with any swap agreement or against cash, securities, or other property of the
     debtor held by or due from such swap participant to guarantee, secure or settle any swap
     agreement; or (17) under subsection (a), of the setoff by a swap participant or financial
     participant of a mutual debt and claim under or in connection with one or more swap
     agreements that constitutes the setoff of a claim against the debtor for any payment or other
     transfer of property due from the debtor under or in connection with any swap agreement



                                              6
    against any payment due to the debtor from the swap participant or financial participant
    under or in connection with any swap agreement or against cash, securities, or other property
    held by, pledged to, under the control of, or due from such swap participant or financial
    participant to margin, guarantee, secure, or settle any swap agreement;

(18) under subsection (a) of the creation or perfection of a statutory lien for an ad valorem property
     tax imposed by the District of Columbia, or a political subdivision of a State, if such tax
     comes due after the filing of the petition. under subsection (a) of the creation or perfection of
     a statutory lien for an ad valorem property tax, or a special tax or special assessment on real
     property whether or not ad valorem, imposed by a governmental unit, if such tax or
     assessment comes due after the date of the filing of the petition;

(19) under subsection (a), of withholding of income from a debtor's wages and collection of
     amounts withheld, under the debtor's agreement authorizing that withholding and collection
     for the benefit of a pension, profit-sharing, stock bonus, or other plan established under
     section 401, 403, 408, 408A, 414, 457, or 501(c) of the Internal Revenue Code of 1986, that is
     sponsored by the employer of the debtor, or an affiliate, successor, or predecessor of such
     employer—

         (A) to the extent that the amounts withheld and collected are used solely for payments
             relating to a loan from a plan under section 408(b)(1) of the Employee Retirement
             Income Security Act of 1974 or is subject to section 72(p) of the Internal Revenue
             Code of 1986; or

         (B) a loan from a thrift savings plan permitted under subchapter III of chapter 84 of title
         5, that satisfies the requirements of section 8433(g) of such title;
         but nothing in this paragraph may be construed to provide that any loan made under a
         governmental plan under section 414(d), or a contract or account under section 403(b),
         of the Internal Revenue Code of 1986 constitutes a claim or a debt under this title;

                   PENSION LOAN REPAYMENT EXCEPTION

                            Section 362(b)(19) excepts from the stay the continuing withholding
                            from the debtor's wages and the collection of loan amounts due as a
                            result of the debtor's borrowing from employer-sponsored pension,
                            profit-sharing, stock bonus, or other plans recognized by the IRS as tax-
                            exempt.

(20) under subsection (a), of any act to enforce any lien against or security interest in real
     property following entry of the order under subsection (d)(4) as to such real property in any
     prior case under this title, for a period of 2 years after the date of the entry of such an order,
     except that the debtor, in a subsequent case under this title, may move for relief from such
     order based upon changed circumstances or for other good cause shown, after notice and a
     hearing;

         IN REM ENFORCEMENT EXCEPTION

                   New subsection 362(b)(20) was added to exclude from the automatic stay
                   actions to enforce liens or security interests following entry of an in rem order
                   described in new § 362(d)(4), unless the debtor in the subsequent bankruptcy
                   case successfully reinstates the automatic stay under the provisions of (d)(4).

                   This new exemption exempts from the automatic stay actions to enforce liens
                   against property for two years after the entry of an order in a prior bankruptcy
                   case that found that the earlier filing was part of a scheme to delay, hinder and
                   defraud creditors involving multiple bankruptcy filings. This is a new basis upon



                                               7
                  which creditors may seek relief from the automatic stay, with the debtor having
                  to rebut the presumption that the subsequent case was filed in bad faith. A
                  debtor may seek to have the automatic stay imposed in the subsequent case but
                  will have to file a motion and show a change in circumstances or good cause,
                  again placing the burden on the debtor to prove that the current case was filed in
                  good faith.

(21) under subsection (a), of any act to enforce any lien against or security interest in real
     property—

         (A) if the debtor is ineligible under section 109(g) to be a debtor in a case under this
             title; or

         (B) if the case under this title was filed in violation of a bankruptcy court order in a
             prior case under this title prohibiting the debtor from being a debtor in another case
             under this title;

                  INELIGIBLE FILING EXCEPTION

                  New subsection 362(b)(21) excludes from the automatic stay any action taken to
                  enforce a lien or security interest if the debtor is ineligible to file bankruptcy
                  under § 109(g) because the current bankruptcy case was filed within 180 days of
                  the dismissal of a prior bankruptcy case, or if the case was filed in violation of a
                  bankruptcy court order prohibiting the debtor from being a debtor under title 11.

                  Presumably, these provisions would mean that the stay does not come into
                  effect, even though the court only later determined that the debtor was not
                  eligible to file, but this creates a problem if the court finds that the debtor was in
                  fact eligible to file.

                  In the past, the filing of bankruptcy cases in violation of a court order has been a
                  problem, one that has been difficult for the courts to deter. There is no provision
                  in the new law for a debtor to rebut the presumption of bad faith if a case was
                  filed in violation of a court order.

(22) subject to subsection (l), under subsection (a)(3), of the continuation of any eviction, unlawful
     detainer action, or similar proceeding by a lessor against a debtor involving residential
     property in which the debtor resides as a tenant under a lease or rental agreement and with
     respect to which the lessor has obtained before the date of the filing of the bankruptcy
     petition, a judgment for possession of such property against the debtor;

         EVICTION EXCEPTIONS

                  Residential Evictions and Unlawful Detainer Actions on Pre-petition
                  Judgment for Possession
                  New subsection (b)(22) excludes from the stay, except for new subsection
                  362(l), the "continuation of any eviction, unlawful detainer action, or similar
                  proceeding by a lessor" of residential property where a prebankruptcy judgment
                  for possession has been obtained against the tenant/debtor. Now, in cases
                  involving residential property where the debtor resides as a tenant under a lease
                  or rental agreement and where the lessor has obtained a judgment for possession
                  before the date of the bankruptcy filing, the automatic stay in most instances is
                  ineffective immediately. Section 362(b)(22) must be read in conjunction with
                  Section 362(l), however, since under § 362(l), if the debtor complies with a
                  series of requirements, the stay may remain in place for thirty days.



                                              8
(23) subject to subsection (m), under subsection (a)(3), of an eviction action that seeks possession
     of the residential property in which the debtor resides as a tenant under a lease or rental
     agreement based on endangerment of such property or the illegal use of controlled substances
     on such property, but only if the lessor files with the court, and serves upon the debtor, a
     certification under penalty of perjury that such an eviction action has been filed, or that the
     debtor, during the 30-day period preceding the date of the filing of the certification, has
     endangered property or illegally used or allowed to be used a controlled substance on the
     property;
         EVICTION EXCEPTIONS
                  Residential Evictions and Endangerment of Property or Illegal Use of
                  Drugs

                           New subsection (b)(23) excludes from the stay, except as provided in
                           new subsection 362(m), an "eviction action that seeks possession of the
                           residential property in which the debtor resides as a tenant," if the
                           eviction is based on "endangerment of such property or the illegal use
                           of controlled substances on such property," but here the landlord must
                           file with the court a "certification under penalty of perjury." The
                           landlord's certification must assert that an eviction proceeding has
                           begun or that the necessary endangerment or illegal use has occurred
                           within 30 days of the bankruptcy filing.

(24) under subsection (a), of any transfer that is not avoidable under section 544 and that is not
     avoidable under section 549;

    TRANSFER EXCEPTION

         New subsection 362(b)(24) excludes from the stay "any transfer that is not avoidable
         under section 544 and that is not avoidable under section 549."

(25) under subsection (a), of—

         (A) the commencement or continuation of an investigation or action by a securities self
             regulatory organization to enforce such organization's regulatory power;

         (B) the enforcement of an order or decision, other than for monetary sanctions, obtained
             in an action by such securities self regulatory organization to enforce such
             organization's regulatory power; or

         (C) any act taken by such securities self regulatory organization to delist, delete, or
             refuse to permit quotation of any stock that does not meet applicable regulatory
             requirements;

             SECURITIES REGULATION EXCEPTION

                  Section 362(b)(25) excepts from the stay the commencement or continuation of
                  an investigation or action by a securities regulatory agency.

(26) under subsection (a), of the setoff under applicable nonbankruptcy law of an income tax
     refund, by a governmental unit, with respect to a taxable period that ended before the date of
     the order for relief against an income tax liability for a taxable period that also ended before
     the date of the order for relief, except that in any case in which the setoff of an income tax
     refund is not permitted under applicable nonbankruptcy law because of a pending action to
     determine the amount or legality of a tax liability, the governmental unit may hold the refund



                                             9
             pending the resolution of the action, unless the court, on the motion of the trustee and after
             notice and a hearing, grants the taxing authority adequate protection (within the meaning of
             section 361) for the secured claim of such authority in the setoff under section 506(a);

                   TAX REFUND SETOFF

                           An exception from the stay is added in § 362(b)(26) to permit setoff under
                           applicable nonbankruptcy law of an income tax refund by a governmental unit
                           as to a taxable period ending before the order for relief against a tax liability for
                           a period ending before the order for relief, unless nonbankruptcy law does not
                           permit it.

         (27) under subsection (a), of the setoff by a master netting agreement participant of a mutual debt
              and claim under or in connection with one or more master netting agreements or any contract
              or agreement subject to such agreements that constitutes the setoff of a claim against the
              debtor for any payment or other transfer of property due from the debtor under or in
              connection with such agreements or any contract or agreement subject to such agreements
              against any payment due to the debtor from such master netting agreement participant under
              or in connection with such agreements or any contract or agreement subject to such
              agreements or against cash, securities, or other property held by, pledged to, under the
              control of, or due from such master netting agreement participant to margin, guarantee,
              secure, or settle such agreements or any contract or agreement subject to such agreements, to
              the extent that such participant is eligible to exercise such offset rights under paragraph (6),
              (7), or (17) for each individual contract covered by the master netting agreement in issue;
              and

                  NETTING AGREEMENT SETOFF

                  Section 362(b)(27) recognizes an exception for a setoff by a master netting agreement
                  participant.

         (28) under subsection (a), of the exclusion by the Secretary of Health and Human Services of the
              debtor from participation in the medicare program or any other Federal health care program
              (as defined in section 1128B(f) of the Social Security Act pursuant to title XI or XVIII of such
              Act).

                  SOCIAL SECURITY ACT EXCEPTION

                  The stay does not apply to the Secretary of Health and Human Services for the purpose of
                  excluding the debtor's participation in Medicare or other federal health care programs. 11
                  U.S.C.A. § 362(b)(28).

The provisions of paragraphs (12) and (13) of this subsection shall apply with respect to any such petition
filed on or before December 31, 1989.

C.       362(c) pertains to the duration of the automatic stay.

(c) Except as provided in subsections (d), (e), and (f)and (h) of this section—

         (1) the stay of an act against property of the estate under subsection (a) of this section continues
         until such property is no longer property of the estate; and

         (2) the stay of any other act under subsection (a) of this section continues until the earliest of—

                  (A) the time the case is closed;




                                                      10
         (B) the time the case is dismissed; or

         (C) if the case is a case under chapter 7 of this title concerning an individual or a case
         under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or denied.

• (3) if a single or joint case is filed by or against debtor who is an individual in a case under
chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-
year period but was dismissed, other than a case refiled under a chapter other than chapter 7
after dismissal under section 707(b)—

         (A) the stay under subsection (a) with respect to any action taken with respect to a debt
             or property securing such debt or with respect to any lease shall terminate with
             respect to the debtor on the 30th day after the filing of the later case;

         (B) on the motion of a party in interest for continuation of the automatic stay and upon
             notice and a hearing, the court may extend the stay in particular cases as to any or
             all creditors (subject to such conditions or limitations as the court may then impose)
             after notice and a hearing completed before the expiration of the 30-day period only
             if the party in interest demonstrates that the filing of the later case is in good faith as
             to the creditors to be stayed; and

         (C) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but
             such presumption may be rebutted by clear and convincing evidence to the
             contrary)—

             (i)        as to all creditors, if—

                    (I) more than 1 previous case under any of chapters 7, 11, and 13 in which the
                    individual was a debtor was pending within the preceding 1-year period;

                    (II) a previous case under any of chapters 7, 11, and 13 in which the individual
                    was a debtor was dismissed within such 1-year period, after the debtor failed to-

                             (aa) file or amend the petition or other documents as required by this
                             title or the court without substantial excuse (but mere inadvertence or
                             negligence shall not be a substantial excuse unless the dismissal was
                             caused by the negligence of the debtor's attorney);

                             (bb) provide adequate protection as ordered by the court; or

                             (cc) perform the terms of a plan confirmed by the court; or

                    (III) there has not been a substantial change in the financial or personal affairs
                    of the debtor since the dismissal of the next most previous case under chapter 7,
                    11, or 13 or any other reason to conclude that the later case will be concluded—

                             (aa) if a case under chapter 7, with a discharge; or

                             (bb) if a case under chapter 11 or 13, with a confirmed plan that will
                             be fully performed; and

             (ii)       as to any creditor that commenced an action under subsection (d) in a
                        previous case in which the individual was a debtor if, as of the date of
                        dismissal of such case, that action was still pending or had been resolved by
                        terminating, conditioning, or limiting the stay as to actions of such creditor;
                        and



                                              11
(4)(A)(i) if a single or joint case is filed by or against a debtor who is an individual under this
title, and if 2 or more single or joint cases of the debtor were pending within the previous year but
were dismissed, other than a case refiled under section 707(b), the stay under subsection (a) shall
not go into effect upon the filing of the later case; and

(ii) on request of a party in interest, the court shall promptly enter an order confirming that no
stay is in effect;

(B) if, within 30 days after the filing of the later case, a party in interest requests the court may
order the stay to take effect in the case as to any or all creditors (subject to such conditions or
limitations as the court may impose), after notice and a hearing, only if the party in interest
demonstrates that the filing of the later case is in good faith as to the creditors to be stayed;

(C) a stay imposed under subparagraph (B) shall be effective on the date of the entry of the order
allowing the stay to go into effect; and

(D) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but such
presumption may be rebutted by clear and convincing evidence to the contrary)--

         (i) as to all creditors if--

                   (I) 2 or more previous cases under this title in which the individual was a debtor
                   were pending within the 1-year period;

                   (II) a previous case under this title in which the individual was a debtor was
                   dismissed within the time period stated in this paragraph after the debtor failed
                   to file or amend the petition or other documents as required by this title or the
                   court without substantial excuse (but mere inadvertence or negligence shall not
                   be substantial excuse unless the dismissal was caused by the negligence of the
                   debtor's attorney), failed to provide adequate protection as ordered by the court,
                   or failed to perform the terms of a plan confirmed by the court; or

                   (III) there has not been a substantial change in the financial or personal affairs
                   of the debtor since the dismissal of the next most previous case under this title,
                   or any other reason to conclude that the later case will not be concluded, if a
                   case under chapter 7, with a discharge, and if a case under chapter 11 or 13,
                   with a confirmed plan that will be fully performed; or

         (ii) as to any creditor that commenced an action under subsection (d) in a previous case
         in which the individual was a debtor if, as of the date of dismissal of such case, such
         action was still pending or had been resolved by terminating, conditioning, or limiting
         the stay as to such action of such creditor.

                   EFFECT OF PRIOR FILINGS

                             Section 362(c) has been amended to add subsections (3) and (4), which
                             broadly restrict application of the stay when the debtor has previously
                             filed bankruptcy within one year of the current case.

                             New Section 362(c)(3) provides that if the debtor had a pending case
                             (other than a Chapter 7 case filed after October 17, 2005) in the
                             preceding year that was dismissed, the stay automatically terminates 30
                             days after the filing of a successive bankruptcy case, unless the debtor
                             demonstrates that he is proceeding in good faith (i.e., there is a




                                              12
rebuttable presumption that second cases were filed in bad faith). This
puts the burden on the debtor to prove otherwise.

Hence, if the individual debtor has been in a single or joint chapter 7,
11, or 13 case, whether filed or merely pending, within one year of
filing the current case and that prior case was dismissed (unless it was
dismissed and the current case filed as a result of § 707(b)), the
automatic stay with respect to any action taken against the debtor as
well as the debtor's property or lease "shall terminate with respect to
the debtor on the 30th day" after filing the current case. A party in
interest may move to keep the stay in effect, only if a motion is filed
within the 30 days and if the moving party shows that the current case
was filed in good faith.

There is a presumption that the current case was filed in bad faith if the
prior case was dismissed due to the debtor's failure to file required
documents or otherwise comply with a court order or if the debtor
failed in the first case to pay adequate protection ordered by the court
or otherwise perform plan terms and if there has not been a substantial
change in circumstances and no reason to believe the debtor will carry
the current case through to discharge.

If the debtor filed two cases within the one-year period following
dismissal of a case within that term, the automatic stay does not go into
effect with the third filing. On request of a party in interest, the court
"shall promptly enter an order confirming that no stay is in effect."
Presumably this would require the court to verify without the benefit of
a hearing that the request for such an order was based upon correct
facts. Another party in interest may still try to put the stay into effect by
filing a motion within 30 days of the bankruptcy filing, again with the
burden of showing that the latest filing was in good faith and again
having to overcome any presumption of bad faith.

Under the old law, the stay applied automatically to all actions against
the debtor or debtor’s property regardless of how many prior cases the
debtor had filed within a year. However, new Section 362(c)(4)
provides that the automatic stay does not even go into effect for a
debtor who has filed two or more cases within the preceding year that
were dismissed. The debtor may file a motion to impose the stay —
but, again, the burden is on the debtor to prove that the pending case
was not filed in bad faith.

Note: A literal reading of the statute indicates that unsecured
creditors are not stayed by a third filing within a year. Creditors
should be cautioned to be careful in continuing to pursue a debtor
who has filed a third petition within a year as the changes are such
a radical departure from current law that some courts may be
reluctant to apply them literally. Caution should also be given
because a dismissal of a case for failure to satisfy the means test
followed by a refiling of a Chapter 13 will not count toward the
three case limit and keeping track of the number and disposition of
the cases may prove difficult.




                 13
D.       362(d) sets forth the requirements that must be met to obtain relief from the automatic stay.

(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay
provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning
such stay—

         (1) for cause, including the lack of adequate protection of an interest in property of such party in
             interest;

                  Relevant Legislative Comments:

                  Subsection (d) requires the court, on request of a party in interest, to grant relief from the
                  stay, such as by terminating, annulling, modifying, or conditioning the stay, for cause.
                  The lack of adequate protection of an interest in property of the party requesting relief
                  from the stay is one cause for relief, but is not the only cause. …, [A] desire to permit
                  an action to proceed to completion in another tribunal may provide another cause. Other
                  causes might include the lack of any connection with or interference with the pending
                  bankruptcy case. For example, a divorce or child custody proceeding involving the debtor
                  may bear no relation to the bankruptcy case. In that case, it should not be stayed. A
                  probate proceeding in which the debtor is the executor or administrator of another's estate
                  usually will not be related to the bankruptcy case, and should not be stayed. Generally,
                  proceedings in which the debtor is a fiduciary, or involving postpetition activities of the
                  debtor, need not be stayed because they bear no relationship to the purpose of the
                  automatic stay, which is debtor protection from his creditors. The facts of each request
                  will determine whether relief is appropriate under the circumstances.

                  The action commenced by the party seeking relief from the stay is referred to as a motion
                  to make it clear that at the expedited hearing under subsection (e), and at hearings on
                  relief from the stay, the only issue will be the lack of adequate protection, the debtor's
                  equity in the property, and the necessity of the property to an effective reorganization of
                  the debtor, or the existence of other cause for relief from the stay.

         (2) with respect to a stay of an act against property under subsection (a) of this section, if—

                  (A) the debtor does not have an equity in such property; and

                  (B) such property is not necessary to an effective reorganization; or

                            The standard of necessity of the property to the reorganization is somewhat
                            abstract. Guidance from the United States Supreme Court, however, suggests
                            that this standard in the context of stay litigation means that a plan must be "in
                            prospect'' requiring "a reasonable possiblity of a successful reorganization within
                            a reasonable time'' of which the subject property is a part. A party seeking relief
                            from the automatic stay with regard to property in which it has an interest should
                            combine with the request that the stay be terminated as to that property a request
                            that continued possession by the debtor of the property be conditioned upon
                            affording the moving party adequate protection.

                            Note that while in a liquidation case the absence of equity or the lack of
                            adequate protection (or the existence of other cause) are the tests for relief from
                            the stay, on the other hand, in a rehabilitation case, the stay may be continued to
                            prevent action against property of the debtor if the property is necessary to the
                            rehabilitation of the debtor, even though the property may be worth substantially
                            less than the debt owed against it (provided, of course, that cause for relief from
                            the stay, such as absence of adequate protection, does not exist). This requires a




                                                       14
                  showing by the debtor that the property is necessary to rehabilitation. It may also
                  require a showing that such a reorganization is possible.

(3) with respect to a stay of an act against single asset real estate under subsection (a), by a
creditor whose claim is secured by an interest in such real estate, unless, not later than the date that
is 90 days after the entry of the order for relief (or such later date as the court may determine for
cause by order entered within that 90-day period) or 30 days after the court determines that the
debtor is subject to this paragraph, whichever is later—

         (A) the debtor has filed a plan of reorganization that has a reasonable possibility of being
         confirmed within a reasonable time; or

         (B) the debtor has commenced monthly payments to each creditor whose claim is secured
         by such real estate (other than a claim secured by a judgment lien or by an unmatured
         statutory lien), which payments are in an amount equal to interest at a current fair market
         rate on the value of the creditor's interest in the real estate.

         (B) the debtor has commenced monthly payments that--

                  (i) may, in the debtor's sole discretion, notwithstanding section 363(c)(2), be
                  made from rents or other income generated before, on, or after the date of the
                  commencement of the case by or from the property to each creditor whose claim
                  is secured by such real estate (other than a claim secured by a judgment lien or
                  by an unmatured statutory lien); and

                  (ii) are in an amount equal to interest at the then applicable nondefault contract
                  rate of interest on the value of the creditor's interest in the real estate; or

                             SINGLE-ASSET REAL ESTATE CASES

                            A third basis for relief from the automatic stay was added by the
                            Bankruptcy Reform Act of 1994 amendments in cases of "single asset
                            real estate.'' "Single asset real estate'' includes real property constituting
                            a single property or project (other than residential real property with
                            fewer than four residential units) which generates substantially all of
                            the gross income of a debtor and on which no substantial business is
                            being conducted by a debtor other than the business of operating the
                            real property and activities incident thereto. Section 362 has been
                            amended by BAPCPA to deal with these oft-criticized "single-asset real
                            estate case."

                            In pre BACCPA cases, the court was required to lift the stay against the
                            real estate within 90 days after the commencement of the case (or such
                            longer time as the court may, for cause, order) unless (1) the debtor has
                            filed a plan of reorganization that has a reasonable possibility of being
                            confirmed within a reasonable time, or (2) the debtor has commenced
                            monthly payments to each creditor whose claim is secured by such real
                            estate.

                            The scope of such cases has been significantly increased by amendment
                            of the definition of that phrase in 11 U.S.C.A. § 101(51B), which
                            eliminates the debt limitation, which previously limited such cases to
                            debtors having aggregate noncontingent, liquidated, secured debts not
                            exceeding $4 million.. Thus larger real estate developments may now
                            be subject to these provisions. However, the definition now excludes a
                            family farmer.



                                              15
                            The section now imposes a requirement in such a case that the debtor
                            must have either (1) filed a confirmable plan or (2) commenced
                            monthly payments to the secured creditor in order to keep the automatic
                            stay in effect. Under former § 362(d)(3), this was an obligation that
                            arose 90 days after the entry of the order for relief. However, because
                            there was sometimes difficulty determining whether a particular case
                            was a single-asset real estate case, the amended Code § 362(d)(3)
                            provides that the date on which the requirement commences is the end
                            of the 90-day period or 30 days after the court determines that the
                            debtor has "single-asset real estate," whichever occurs later.
                            Presumably, if there is some doubt, some interested party will wish to
                            raise the issue before the running of the 90-day period. The law also
                            now allows the debtor to make such payments from the rents or other
                            income generated by the property.

                            The new law also changes the amount of the payment necessary to
                            continue the stay in effect. Under the former Code, the debtor was
                            required to pay an amount "equal to interest at a current fair market rate
                            on the value of the creditor's interest in the real estate." Now, in cases
                            governed by BAPCPA, the payment must be in the amount of the
                            "nondefault contract rate of interest on the value of the creditor's
                            interest in the real estate." Of course, prescribing rates in legislation is
                            risky business. In a rising interest rate environment, this provision may
                            actually benefit single-asset real estate debtors.

                            The monthly payments required under 11 U.S.C.A. § 362(d)(3) may be
                            made notwithstanding the failure of the debtor to obtain consent for use
                            of a lender's cash collateral under 11 U.S.C.A. § 363(c)(2). Thus the
                            payments "may, in the debtor's sole discretion, notwithstanding section
                            363(c)(2), be made from rents or other income generated before, on, or
                            after the date of the commencement of the case by or from the property
                            to each creditor whose claim is secured by such real estate." 11
                            U.S.C.A. § 362(d)(3)(B)(i). This language is not perfectly clear, but it
                            appears to require a correspondence between the collateral and the
                            creditor to be paid. In other words, creditor A may be paid from its
                            rents or other income generated by its collateral. Creditor B may not be
                            paid from the collateral of creditor A.

(4) with respect to a stay of an act against real property under subsection (a), by a creditor whose
claim is secured by an interest in such real property, if the court finds that the filing of the petition
was part of a scheme to delay, hinder, and defraud creditors that involved either—

         (A) transfer of all or part ownership of, or other interest in, such real property without
         the consent of the secured creditor or court approval; or

         (B) multiple bankruptcy filings affecting such real property.

If recorded in compliance with applicable State laws governing notices of interests or liens in real
property, an order entered under paragraph (4) shall be binding in any other case under this title
purporting to affect such real property filed not later than 2 years after the date of the entry of
such order by the court, except that a debtor in a subsequent case under this title may move for
relief from such order based upon changed circumstances or for good cause shown, after notice
and a hearing. Any Federal, State, or local governmental unit that accepts notices of interests or
liens in real property shall accept any certified copy of an order described in this subsection for
indexing and recording.



                                              16
                  IN REM ENFORCEMENT EXCEPTION

                  New Section 362(d)(4) has been added to provide that, as to real property, if the court
                  finds that the bankruptcy case was filed as part of a "scheme to delay, hinder, and defraud
                  creditors," either by the transfer of all or part of an interest in the realty without the
                  secured creditor's consent or by multiple bankruptcy filings that affect the realty
                  (presumably stopping foreclosure actions, for example), the court may grant in rem relief
                  from the automatic stay. That is, the relief from the stay would have a binding effect in
                  any other bankruptcy case that might be filed within two years of the entry of the order,
                  provided that the order was also recorded in compliance with state real estate noticing
                  laws. A debtor in a subsequent case who may be affected by this in rem order could move
                  for relief from the order to reinstate a stay, provided that the debtor must show a change
                  of circumstances since entry of the order or other good cause. The subsection specifically
                  provides that federal, state, or local governmental units must accept a certified copy of
                  the in rem order for "indexing and recording." In the past, this kind of property-specific
                  relief has been used regularly against abusive filers by some bankruptcy courts around
                  the country, but had been granted very sparingly in some jurisdictions.

E.       362(e) sets forth the time deadlines for the court to hear or determine a motion for relief from the
         automatic stay.

         Section 362(e)(1) states:

(e)(1) Thirty days after a request under subsection (d) of this section for relief from the stay of any act
against property of the estate under subsection (a) of this section, such stay is terminated with respect to the
party in interest making such request, unless the court, after notice and a hearing, orders such stay
continued in effect pending the conclusion of, or as a result of, a final hearing and determination under
subsection (d) of this section. A hearing under this subsection may be a preliminary hearing, or may be
consolidated with the final hearing under subsection (d) of this section. The court shall order such stay
continued in effect pending the conclusion of the final hearing under subsection (d) of this section if there
is a reasonable likelihood that the party opposing relief from such stay will prevail at the conclusion of such
final hearing. If the hearing under this subsection is a preliminary hearing, then such final hearing shall be
concluded not later than thirty days after the conclusion of such preliminary hearing, unless the 30-day
period is extended with the consent of the parties in interest or for a specific time which the court finds is
required by compelling circumstances.

         Once the motion has been properly filed and served, the court must conduct a hearing within thirty
         days. Such hearing may be a preliminary hearing, provided that a final hearing on continuation or
         relief from the automatic stay is concluded within 30 days after such initial hearing. These time
         limits are not applicable to motions seeking relief from the stay other than with respect to
         property. Although Section 362(e) does not require it, the burden of obtaining the hearing rests on
         the debtor after the creditor has filed its motion. If the court fails to conduct a hearing within that
         time, the automatic stay is terminated with respect to the property to which relief is sought. The
         hearing conducted within thirty days of the filing of the motion is referred to as the "preliminary
         hearing." At the preliminary hearing, the court may entertain evidence and decide whether it is
         appropriate to grant relief under Section 362(d). Alternatively, if the court requires more time or
         evidence to resolve the matter, it may order that the automatic stay be continued if the party
         opposing relief has a "reasonable likelihood" of prevailing at the final hearing. The debtor can
         prove a reasonable likelihood of succeeding at the final hearing if it demonstrates that there is a
         reasonable probability that it will be able to propose a successful reorganization.

         If the court conducts a final hearing, it must do so within thirty days from the date of the
         preliminary hearing. If the court does not order continuation of the stay within the time limits set
         out, the stay is deemed terminated. At the final hearing, the court must rule on whether the
         automatic stay will be terminated, continued, or modified as to the creditor's collateral. Thus,



                                                      17
         although the court is allowed some latitude in adjudicating the automatic stay issues, Congress
         clearly imposed an expedited schedule to prevent the automatic stay from continuing by reason of
         judicial inaction.

                  a.       Reimposition of the stay under Section 105

                                     As a final procedural consideration, both the debtor and creditor should
                                     be aware that, even if the automatic stay terminates by reason of the
                                     running of one of the time frames set out in §362(e) and the rules, the
                                     debtor or trustee may seek a new stay against action by the secured
                                     creditor (or other party in interest) under §105, and the bankruptcy
                                     court under its equitable powers deriving from that section may
                                     reimpose an injunction that parallels the automatic stay if it believes
                                     such an injunction is necessary. In re Wedgewood Realty Group, Ltd.,
                                     878 F2d at 699-700; Explorer Drilling Co. v. Martin Exploration Co.
                                     (In re Martin Exploration Co.), 731 F2d 1210, 1214 (5th Cir. 1984);
                                     Medical Plaza, Ltd. v. Medical Plaza Assocs., Ltd. (In re Medical Plaza
                                     Assocs., Ltd.), 67 BR 879, 882 (WD Mo. 1986).

                                     Much dispute exists regarding the origin and result of the court's
                                     "reimposition" of the automatic stay. Some courts have found that the
                                     bankruptcy court's injunctive powers under §105 enable the court to
                                     reimpose the automatic stay if it lapses under Section 362(e). Other
                                     courts, however, have rejected the use of §105 for such purposes on the
                                     grounds that a bankruptcy court cannot exercise its equitable powers in
                                     contravention of the Bankruptcy Code's express language. Although the
                                     issue remains in dispute between the circuits, the majority position
                                     supports the use of §105 to impose injunctive protection for certain
                                     property when a party in interest requests relief and satisfies the criteria
                                     for injunctive relief.

                                     This author, however believes that the express congressional intent
                                     espoused by Congress in the recent amendments to §362(e) make it
                                     seem like Congress wanted an absolute drop dead, but there is an
                                     equally persuasive countervailing argument that circumstances can
                                     change which might warrant the reimposition of the stay, and Courts
                                     need to maintain that flexibility.

         TERMINATION IN 60 DAYS ON A MOTION AGAINST AN INDIVIDUAL DEBTOR

                  Under the language of Section 362(e), if the bankruptcy court fails to resolve the
                  automatic stay issues within sixty days of the filing of the motion for relief, the stay is
                  lifted without further proceedings. Section 362(e) is amended and renumbered to add a
                  new subsection (2), which states:

(2) Notwithstanding paragraph (1), in a case under chapter 7, 11, or 13 in which the debtor is an
individual, the stay under subsection (a) shall terminate on the date that is 60 days after a request is made
by a party in interest under subsection (d), unless—

         (A) a final decision is rendered by the court during the 60-day period beginning on the date of the
         request; or

         (B) such 60-day period is extended--

                  (i) by agreement of all parties in interest; or




                                                      18
                  (ii) by the court for such specific period of time as the court finds is required for good
                  cause, as described in findings made by the court.

                            Note that new 362(e)(2) is only applicable when the debtor is an individual.

F.       362(f) sets forth a mechanism for obtaining emergency relief from the stay where it is necessary to
         prevent irreparable harm.

(f) Upon request of a party in interest, the court, with or without a hearing, shall grant such relief from the
stay provided under subsection (a) of this section as is necessary to prevent irreparable damage to the
interest of an entity in property, if such interest will suffer such damage before there is an opportunity for
notice and a hearing under subsection (d) or (e) of this section.

         As per this subsection and Bankruptcy Rule 4001(2), under certain circumstances, if a party can
         demonstrate immediate and irreparable loss from continuation of the automatic stay, relief from
         the stay may be granted on an ex parte basis (that is, without notice). Authorization to order such
         relief may be granted only if "(A) it clearly appears from specific facts shown by affidavit or by a
         verified motion that immediate and irreparable injury, loss, or damage will result to the movant
         before the adverse party or the attorney for the adverse party can be heard in opposition, and (B)
         the movant's attorney certifies to the court in writing the efforts, if any, which have been made to
         give notice and the reasons why notice should not be required." If ex parte relief is granted, the
         party obtaining the relief shall immediately give oral notice to the trustee and the debtor and mail
         or otherwise transmit to the adverse party a copy of the court's order granting the relief. The
         adverse party then has the right to seek reinstatement of the stay on two days' notice to the party
         that obtained the ex parte relief. When reinstatement is sought, the court is directed to proceed
         "expeditiously" to hear and determine the motion.

G.       362(g) sets forth the burdens of proof for the debtor and the movant of a motion for relief from the
         automatic stay.

(g) In any hearing under subsection (d) or (e) of this section concerning relief from the stay of any act
under subsection (a) of this section—

         (1) the party requesting such relief has the burden of proof on the issue of the debtor's equity in
         property; and

         (2) the party opposing such relief has the burden of proof on all other issues.

              Whose burden is it (creditor, debtor or trustee) to establishing or disprove the existence
              of "cause" for relief from stay?

              The party opposing relief from the stay, usually the debtor, has the burden of proof on all
              issues other than whether she has equity in the property. Nonetheless, the party seeking relief
              from the stay must establish a prima facie case. Once a prima facie case is established, "the
              burden of producing evidence, as well as the ultimate burden of proof, i.e., risk of
              nonpersuasion, shifts to the debtor."

              Although it appears to be contrary to the statutory language of Section 362(g), some courts
              have required that upon filing a motion for relief, the movant should bear the burden of proof
              on whether "cause" exists under Section 362(d)(1). In re Laguna Assocs. Ltd. Partnership, 147
              BR 709, 714 (Bankr. ED Mich. 1992). Courts have reached this conclusion on the grounds
              that Section 362(d)(1), which allows for relief from the automatic stay "for cause," should be
              read in conjunction with Section 362(g)(1). Id. Such a construction, however, seems to depart
              from the express language of Section 362(g). Section 362(g) clearly states that the party
              seeking relief "has the burden of proof on the issue of the debtor's equity in the property,"
              while "all other issues" of proof remain upon the debtor. 11 USC §§ 362(g)(1)-362(g)(2)



                                                       19
(1988). The catchall language in Section 362(g)(2) conflicts with any construction that would
carve out additional burdens of proof for the creditor. Moreover, the rationale behind this
statutory allocation "is that the automatic stay is intended only to shift the initiative to the
creditor to bring the issue before the bankruptcy court, and not to create any right in the
debtor to stay proceedings." In re Laguna Assocs. Ltd. Partnership, 147 BR at 714. If so, it is
questionable whether the language of Section 362(g) should be construed broadly to shift a
greater evidentiary burden upon the creditor.

The policy foundations underlying those courts and commentators supporting a rule that a
party seeking relief under Sec. 362(d)(1) bears the burden of producing evidence establishing
a legally sufficient basis for such relief argue that it would be both illogical and inefficient to
require the debtor to demonstrate the nonexistence of every conceivable cause for relief under
Sec. 362(d)(1). . . . Practical considerations also underlie the allocation of the initial burden of
production to the movant. As Professor Kennedy has noted, "facts providing a justification for
modifying the stay will ordinarily be more easily provable by the creditor than disprovable by
the [debtor]." Kennedy, The Automatic Stay in Bankruptcy, 11 U.Mich.J.L.Ref. 175, 227
(1978). Further, if the burden of producing evidence were not initially allocated to the party
seeking relief under Sec. 362(d)(1), debtors would encounter difficult, if not insurmountable,
problems of proof.

While the burden of proof in all matters other than whether or not equity exists in the property
is on the debtor (or trustee) in an action seeking relief from the automatic stay. Of course, the
lender seeking relief from the automatic stay must keep in mind that the court's view initially
will be that the relief sought may effectively end any hope of any other party ever receiving
anything in the bankruptcy case. Thus, it may be anticipated that a bankruptcy court will be
inclined in any doubtful situation to rule against the lender.

    i.        Creditor’s prima facie showing

    Party requesting relief from automatic stay must first present at least a prima facie
    showing of "cause." In re Cummings, 221 B.R. 814 (Bankr. N.D. Ala. 1998); In re
    Peregrine Systems, Inc., 314 B.R. 31, 43 Bankr. Ct. Dec. (CRR) 156 (Bankr. D. Del.
    2004); Matter of Laguna Associates Ltd. Partnership, 147 B.R. 709 (Bankr. E.D. Mich.
    1992); In re Webber, 314 B.R. 1 (Bankr. N.D. Okla. 2004); In re Milstein, 304 B.R. 208,
    42 Bankr. Ct. Dec. (CRR) 119 (Bankr. E.D. Pa. 2004).

    To establish "cause" for relief from stay, creditor must make minimal threshold showing
    that providing stay relief will perceptibly further ends sought by the Bankruptcy Code. In
    re Shultz, 95 A.F.T.R.2d 2005-2277 (Bankr.N.D.Ohio.,2005)

    Failure on part of party moving for relief from stay to establish the requisite "cause" will
    result in denial of motion, without need for debtor to prove its entitlement to continued
    protection of stay. In re Ice Cream Liquidation, Inc., 281 B.R. 154 (Bankr. D. Conn.
    2002); In re Fitzgerald, 237 B.R. 252 (Bankr. D. Conn. 1999); In re Webber, 314 B.R. 1
    (Bankr. N.D. Okla. 2004).

    Secured creditor moving for relief from stay, on "for cause" basis, in order to exercise its
    rights in collateral has burden of showing that it holds a secured claim, and that it has
    factual and legal right to relief that it seeks. In re Gaines, 243 B.R. 221, 35 Bankr. Ct.
    Dec. (CRR) 149 (Bankr. N.D.N.Y. 1999).

    Relief from automatic stay cannot be granted for cause where no proof has been
    submitted at trial on this issue. In re Verdon, 95 B.R. 877, 21 Collier Bankr. Cas. 2d
    (MB) 79, Bankr. L. Rep. (CCH) ¶72680 (Bankr. N.D.N.Y. 1989).




                                         20
Although § 362(g) places burden of proof on debtor to establish all issues other than lack
of equity in property, issue of cause for relief from stay is peculiarly within responsibility
of creditor to present prima facie case of cause for relief, although debtor has ultimate
burden of persuasion to rebut that issue; debtor does not start out by proving absence of
cause if unsecured creditor fails to show some evidence of good cause for relief. In re
Pioneer Commercial Funding Corp., 114 B.R. 45 (Bankr. S.D.N.Y. 1990)

Movant for relief from stay for cause has burden of presenting prima facie case or legally
sufficient basis for such relief; conclusory statements that continuance of stay will cause
irreparable harm or that injury will occur if relief is denied are insufficient to establish
cause. In re Texaco Inc., 81 B.R. 820, 17 Bankr. Ct. Dec. (CRR) 17, 18 Collier Bankr.
Cas. 2d (MB) 243 (Bankr. S.D.N.Y. 1988).

Although party opposing relief from stay has ultimate burden of disproving existence of
"cause" for relief, movant has initial burden to show that "cause" exists. In re Henderson,
245 B.R. 449 (Bankr. S.D.N.Y. 2000).

ii.      What is a sufficient prima facie showing?

Creditor commencing action for relief from stay under 11 USCA § 362(d)(1) has initial
burden of proving prima facie case to show that cause exists; when creditor establishes
prima facie case, Chapter 13 debtor must then come forward with evidence that creditor's
position is adequately protected; consequently, where record presented is limited to
arguments of counsel and no evidence is presented by creditor to establish prima facie
case for cause for relief from stay--for example, evidence that postconfirmation payments
have not been made or evidence to show debtor's lack of equity in property, depreciating
collateral, nonpayment of taxes, failure to maintain insurance, failure to keep property in
good state of repair, or any other facts tending to evidence lack of adequate protection--
debtor, rather than party seeking relief from stay, must prevail. In re Brown, 78 B.R. 499
(Bankr. S.D. Ohio 1987).

Mortgage lender moving for relief from stay on ground that Chapter 13 debtors were
allegedly delinquent in their mortgage payments, and that lender's interests were not
adequately protected, failed to satisfy its initial burden of making a showing of "cause,"
and its motion had to be denied on that basis, where evidence established that debtors had
in fact made all of the required mortgage payments and that, to extent that any
delinquency existed, it was result of mortgagee's failure to properly apply and account for
debtors' payments; inasmuch as debtors were gainfully employed and had been faithfully
making their payments, mortgagee's interest in property was adequately protected. In re
Webber, 314 B.R. 1 (Bankr. N.D. Okla. 2004).

Following initial showing by mortgagee of "cause" for lifting stay, based on Chapter 11
debtor's postpetition default in mortgage payments and on generally poor condition of
property at time of inspection by mortgagee's agent, debtor satisfied his burden of
showing a lack of "cause," based on repairs which he had effected following inspection,
which had resulted in certification of property for rental, and on fact that, aside from
debtor's one missed payment, he was thereafter current in payments to mortgagee. In re
Dupell, 235 B.R. 783, 34 Bankr. Ct. Dec. (CRR) 889, 42 Collier Bankr. Cas. 2d (MB)
496 (Bankr. E.D. Pa. 1999).

Creditor's evidence of debtor's continued failure to tender periodic payments on secured
debt satisfies creditor's burden of producing evidence of "cause" for relief and such
burden then shifts to debtor to prove that adequate protection exists. In re Ocasio, 97 B.R.
825 (Bankr. E.D. Pa. 1989).




                                    21
                  iii.     Debtor’s burden

                  Debtor need not raise and then negate every conceivable cause for granting relief from
                  stay. In re Digby, 47 B.R. 614, 12 Collier Bankr. Cas. 2d (MB) 440 (Bankr. N.D. Ala.
                  1985).

                  Where debtor rests without presenting any evidence as to cause under 11 USCA §
                  362(d)(1), debtor has failed to sustain burden imposed under § 362(g)(2) and automatic
                  stay should be lifted. In re Highcrest Management Co., Inc., 30 B.R. 776 (Bankr.
                  S.D.N.Y. 1983).

                  While broker of Chapter 11 debtor-foreign mutual fund had initial burden of production
                  of evidence that "cause" existed for relief from stay to allow broker's state court action
                  against debtor to proceed, debtor had burden of proof that stay relief was not warranted.
                  In re RCM Global Long Term Capital Appreciation Fund, Ltd., 200 B.R. 514 (Bankr.
                  S.D.N.Y. 1996).

H.       The new law eliminates old 362(h), which set forth the damages provisions for relief from the
         automatic stay. New 362(h) sets forth the effect of a statement of intent as to leased or secured
         personal property, or the failure to redeem or reaffirm the same property.

                  Former § 362(h) is redesignated as (k) and a new subsection (h) is added to provide that,
                  consistent with the amendment to § 521(a)(2), if the individual debtor does not timely file
                  the statement of intention as to leased property or secured personal property or does not
                  redeem or reaffirm as to that personalty within the 30 days from the first meeting of
                  creditors or does not timely assume an unexpired lease, the automatic stay terminates as
                  to that property. Note that new subsection (h) refers to § 521(a)(2) for the time within
                  which the debtor must carry out the statement of intent. Section 521(a)(2) reduced the
                  time for the debtor to carry out those choices to 30 days. However, a new subsection
                  521(a)(6) retains 45 days as the trigger for automatic termination of the stay when the
                  debtor fails to act on the statement of intent as to purchase-money collateral. This
                  difference will no doubt cause confusion and some litigation.

                  There is a savings clause in § 362(h)(1)(B): If the secured creditor does not agree to the
                  reaffirmation proposed by the debtor, the stay does not automatically terminate;
                  presumably, the creditor would then have to move for stay relief. Section 362(h)(2)
                  provides that subparagraph (1)'s termination of the stay does not apply if the court finds
                  on the trustee's motion that the property has value for the bankruptcy estate. The court
                  may order adequate protection to the secured creditor and surrender of the collateral to
                  the trustee, and, if the court does not grant the trustee's motion, which must be filed
                  before the expiration of the § 521(a)(2) time for the debtor to file a statement of intent
                  and to carry out that statement (a maximum total of 60 days from the meeting of
                  creditors), the automatic stay terminates upon conclusion of the hearing on the trustee's
                  motion. This would seem to say that termination is automatic and not requiring an order,
                  but no doubt orders will be requested.

(h)(1) In a case in which the debtor is an individual, the stay provided by subsection (a) is terminated with
respect to personal property of the estate or of the debtor securing in whole or in part a claim, or subject to
an unexpired lease, and such personal property shall no longer be property of the estate if the debtor fails
within the applicable time set by section 521(a)(2)—

         (A) to file timely any statement of intention required under section 521(a)(2) with respect to such
         personal property or to indicate in such statement that the debtor will either surrender such
         personal property or retain it and, if retaining such personal property, either redeem such
         personal property pursuant to section 722, enter into an agreement of the kind specified in section




                                                      22
         524(c) applicable to the debt secured by such personal property, or assume such unexpired lease
         pursuant to section 365(p) if the trustee does not do so, as applicable; and

         (B) to take timely the action specified in such statement, as it may be amended before expiration of
         the period for taking action, unless such statement specifies the debtor's intention to reaffirm such
         debt on the original contract terms and the creditor refuses to agree to the reaffirmation on such
         terms.

(2) Paragraph (1) does not apply if the court determines, on the motion of the trustee filed before the
expiration of the applicable time set by section 521(a)(2), after notice and a hearing, that such personal
property is of consequential value or benefit to the estate, and orders appropriate adequate protection of
the creditor's interest, and orders the debtor to deliver any collateral in the debtor's possession to the
trustee. If the court does not so determine, the stay provided by subsection (a) shall terminate upon the
conclusion of the hearing on the motion.

(h) An individual injured by any willful violation of a stay provided by this section shall recover actual
damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive
damages.

I.       New 362(i) deals with the effect of a debt repayment plan

                  If a prior chapter 7, 11, or 13 case was dismissed due to the debtor entering into a debt
                  repayment plan, then no presumption of bad faith is created by the prior dismissal. 11
                  U.S.C.A. § 362(i). 362(i) states:

(i) If a case commenced under chapter 7, 11, or 13 is dismissed due to the creation of a debt repayment
plan, for purposes of subsection (c)(3), any subsequent case commenced by the debtor under any such
chapter shall not be presumed to be filed not in good faith.

J.       New 362(j) deals with orders confirming termination of stay

(j) On request of a party in interest, the court shall issue an order under subsection (c) confirming that the
automatic stay has been terminated.

K.       New 362(k), replaces olds 362(h) dealing with damages for violations of the automatic stay

(k)(1) Except as provided in paragraph (2), an individual injured by any willful violation of a stay provided
by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate
circumstances, may recover punitive damages.

(2) If such violation is based on an action taken by an entity in the good faith belief that subsection (h)
applies to the debtor, the recovery under paragraph (1) of this subsection against such entity shall be
limited to actual damages.

         WILLFUL VIOLATIONS

                  By amendment to § 362(k)(2), if a violation of the automatic stay, even though willful,
                  was made by a creditor who in good faith believed that the debtor's prior case was
                  dismissed due to the conditions specified in § 362(h), any recovery by the debtor is
                  limited to actual damages. This would appear to greatly limit those situations in which
                  courts have previously awarded punitive damages or other incidental damages.




                                                       23
L.       New 362(l) provides a mechanism to delay the effect of the exemption for residential landlords
         under new Section 362(b)(22) dealing with prepetition judgment for possession

                  The exception for the landlord in § 362(b)(22) shall be delayed for 30 days, that is, the
                  stay would be in effect for that time, if the debtor files with the bankruptcy petition a
                  certification under penalty of perjury that there are circumstances recognized by
                  applicable nonbankruptcy law that would permit the debtor to cure "the entire monetary
                  default that gave rise to the judgment for possession," and the debtor must deposit with
                  the clerk of the court sufficient money to pay any rent becoming due during that 30-day
                  period. Assuming the debtor does all of this, the stay would be in effect until the court
                  ordered otherwise, but if the landlord objected to the certification, a hearing must be held
                  within 10 days of the objection.

(l)(1) Except as otherwise provided in this subsection, subsection (b)(22) shall apply on the date that is 30
days after the date on which the bankruptcy petition is filed, if the debtor files with the petition and serves
upon the lessor a certification under penalty of perjury that—

         (A) under nonbankruptcy law applicable in the jurisdiction, there are circumstances under which
         the debtor would be permitted to cure the entire monetary default that gave rise to the judgment
         for possession, after that judgment for possession was entered; and

         (B) the debtor (or an adult dependent of the debtor) has deposited with the clerk of the court, any
         rent that would become due during the 30-day period after the filing of the bankruptcy petition.

(2) If, within the 30-day period after the filing of the bankruptcy petition, the debtor (or an adult dependent
of the debtor) complies with paragraph (1) and files with the court and serves upon the lessor a further
certification under penalty of perjury that the debtor (or an adult dependent of the debtor) has cured, under
nonbankrupcty law applicable in the jurisdiction, the entire monetary default that gave rise to the judgment
under which possession is sought by the lessor, subsection (b)(22) shall not apply, unless ordered to apply
by the court under paragraph (3).

(3)(A) If the lessor files an objection to any certification filed by the debtor under paragraph (1) or (2), and
serves such objection upon the debtor, the court shall hold a hearing within 10 days after the filing and
service of such objection to determine if the certification filed by the debtor under paragraph (1) or (2) is
true.

(B) If the court upholds the objection of the lessor filed under subparagraph (A)--

         (i) subsection (b)(22) shall apply immediately and relief from the stay provided under subsection
         (a)(3) shall not be required to enable the lessor to complete the process to recover full possession
         of the property; and

         (ii) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of
         the court's order upholding the lessor's objection.

(4) If a debtor, in accordance with paragraph (5), indicates on the petition that there was a judgment for
possession of the residential rental property in which the debtor resides and does not file a certification
under paragraph (1) or (2)—

         (A) subsection (b)(22) shall apply immediately upon failure to file such certification, and relief
         from the stay provided under subsection (a)(3) shall not be required to enable the lessor to
         complete the process to recover full possession of the property; and

         (B) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of
         the docket indicating the absence of a filed certification and the applicability of the exception to
         the stay under subsection (b)(22).



                                                       24
(5)(A) Where a judgment for possession of residential property in which the debtor resides as a tenant
under a lease or rental agreement has been obtained by the lessor, the debtor shall so indicate on the
bankruptcy petition and shall provide the name and address of the lessor that obtained that pre-petition
judgment on the petition and on any certification filed under this subsection.

(B) The form of certification filed with the petition, as specified in this subsection, shall provide for the
debtor to certify, and the debtor shall certify--

         (i) whether a judgment for possession of residential rental housing in which the debtor resides has
         been obtained against the debtor before the date of the filing of the petition; and

         (ii) whether the debtor is claiming under paragraph (1) that under nonbankruptcy law applicable
         in the jurisdiction, there are circumstances under which the debtor would be permitted to cure the
         entire monetary default that gave rise to the judgment for possession, after that judgment of
         possession was entered, and has made the appropriate deposit with the court.

(C) The standard forms (electronic and otherwise) used in a bankruptcy proceeding shall be amended to
reflect the requirements of this subsection.

(D) The clerk of the court shall arrange for the prompt transmittal of the rent deposited in accordance with
paragraph (1)(B) to the lessor.

M.       New 362(m) provides a mechanism to delay the effect of the exemption for residential landlords
         under new Section 362(b)(23) dealing with endangerment to property and illegal drug use

                   Subsection 362(m) is similar to Subsection 362(l), but requires the debtor to object within
                   15 days of the landlord's certification that the tenancy is endangering the property or that
                   the tenant is conducting the described illegal activity. A hearing must be held within 10
                   days of the debtor's objection, and the debtor has the burden of satisfying the court that
                   the conditions complained of by the landlord have been remedied in order to keep the
                   stay in effect.

(m)(1) Except as otherwise provided in this subsection, subsection (b)(23) shall apply on the date that is 15
days after the date on which the lessor files and serves a certification described in subsection (b)(23).

(2)(A) If the debtor files with the court an objection to the truth or legal sufficiency of the certification
described in subsection (b)(23) and serves such objection upon the lessor, subsection (b)(23) shall not
apply, unless ordered to apply by the court under this subsection.

(B) If the debtor files and serves the objection under subparagraph (A), the court shall hold a hearing
within 10 days after the filing and service of such objection to determine if the situation giving rise to the
lessor's certification under paragraph (1) existed or has been remedied.

(C) If the debtor can demonstrate to the satisfaction of the court that the situation giving rise to the lessor's
certification under paragraph (1) did not exist or has been remedied, the stay provided under subsection
(a)(3) shall remain in effect until the termination of the stay under this section.

(D) If the debtor cannot demonstrate to the satisfaction of the court that the situation giving rise to the
lessor's certification under paragraph (1) did not exist or has been remedied--

         (i) relief from the stay provided under subsection (a)(3) shall not be required to enable the lessor
         to proceed with the eviction; and

         (ii) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of
         the court's order upholding the lessor's certification.



                                                        25
(3) If the debtor fails to file, within 15 days, an objection under paragraph (2)(A)--

         (A) subsection (b)(23) shall apply immediately upon such failure and relief from the stay provided
         under subsection (a)(3) shall not be required to enable the lessor to complete the process to
         recover full possession of the property; and

         (B) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of
         the docket indicating such failure.

N.       New 362(n) deals with in rem permanent relief after small business filing

                  The stay imposed by 11 U.S.C.A. § 362 is significantly limited by new subsection (n)
         when the small business debtor has filed a previous bankruptcy case. Under the amendment, the
         automatic stay would not apply in a small business case if the debtor has another case pending
         simultaneously (although perhaps the stay in that case might still be in effect), and the stay would
         not operate if the debtor was in a small business case that was dismissed within two years of the
         order for relief in the second case or if the debtor had a plan confirmed in a small business case
         within two years of the new case.

                  This limitation of the stay is also triggered in the case of an entity that acquired all or
         substantially all of the assets of a small business under the circumstances described above. 11
         U.S.C.A. § 362(n)(1)(D). This successor debtor can overcome the denial of stay protection if it can
         show by a preponderance of the evidence that the subsequent bankruptcy filing resulted from
         circumstances beyond the debtor's control and that it is more likely than not that the court will
         confirm a plan, other than a liquidating plan, in a reasonable time. 11 U.S.C.A. § 362(n)(1)(D).
         Section 362(n) states:

(n)(1) Except as provided in paragraph (2), subsection (a) does not apply in a case in which the debtor—

         (A) is a debtor in a small business case pending at the time the petition is filed;

         (B) was a debtor in a small business case that was dismissed for any reason by an order that
         became final in the 2-year period ending on the date of the order for relief entered with respect to
         the petition;

         (C) was a debtor in a small business case in which a plan was confirmed in the 2-year period
         ending on the date of the order for relief entered with respect to the petition; or

         (D) is an entity that has acquired substantially all of the assets or business of a small business
         debtor described in subparagraph (A), (B), or (C), unless such entity establishes by a
         preponderance of the evidence that such entity acquired substantially all of the assets or business
         of such small business debtor in good faith and not for the purpose of evading this paragraph.

(2) Paragraph (1) does not apply--

         (A) to an involuntary case involving no collusion by the debtor with creditors; or

         (B) to the filing of a petition if--

                   (i) the debtor proves by a preponderance of the evidence that the filing of the petition
                   resulted from circumstances beyond the control of the debtor not foreseeable at the time
                   the case then pending was filed; and

                   (ii) it is more likely than not that the court will confirm a feasible plan, but not a
                   liquidating plan, within a reasonable period of time.



                                                        26
O.       New 362(o) prohibits the staying of setoffs exempted under 362(b) by courts or administrative
         agencies.

(o) The exercise of rights not subject to the stay arising under subsection (a) pursuant to paragraph (6),
(7), (17), or (27) of subsection (b) shall not be stayed by any order of a court or administrative agency in
any proceeding under this title.

         The setoff rights exempted from the stay under 362(b) cannot be stayed by court or administrative
         order. It is unclear by the language whether this is limited to prohibiting a bankruptcy court (or in
         the appropriate circumstances superior district court) to reimpose the stay by injunction, or
         whether this was intended to apply to all courts and agencies who might otherwise impose their
         own stay because of the pendency of a bankruptcy.

II.      What constitutes “cause” necessary to obtain relief under Section 362(d)(1)

           Bankruptcy lawyers commonly look for equitable cause as the basis of a motion for relief from the
automatic stay. Much like the cause needed to dismiss a case, cause for relief from the stay is anything that
justifies the court in granting relief. You will note that § 362(d)(1) refers to "cause, including the lack of
adequate protection ..." Thus, the statute appears to contemplate types of "cause" other than lack of
adequate protection, although it does not say what they are. The lack of concrete enumerated types of
"cause" (other than adequate protection) justifying relief from the stay leaves the court with broad
discretion in granting such relief. The concept of "cause" under § 362(d)(1) is flexible enough to allow the
court to balance the interests of the non-debtor party against the interests of the estate, and act accordingly.

          The following describes only a few examples of situations found to constitute "cause" warranting
relief from stay. Some of the most typical situations in which stay relief is granted for cause include:

         1.       Debtor’s bad faith in filing the bankruptcy case or plan of reorganization (but usually
                  dealt with in conjunction with motion to dismiss, or to convert the case to Chapter 7
                  under Section 1112(b)).

                            i.       See also, Section 362(d)(3) regarding stay relief in case of “single asset
                                     real estate” since it is in single asset cases that most of these motions
                                     are brought.

                            ii.      Many of factual circumstances that support stay relief "for cause" will
                                     equally support a motion to dismiss debtor's Chapter 13 case. In re
                                     Herrin, 2005 WL 1308886 (Bankr.N.D.Ind.Hammond.Div,2005).

                                     In Herrin, the court held that a succession of prior unsuccessful
                                     bankruptcy cases by debtor does not constitute "cause" for granting
                                     relief from automatic stay; relief from stay is gauged by whether debtor
                                     in current case is performing his/her obligations in that case with
                                     respect to creditor's collateral. But see, new §362(b)(20) & (21) &
                                     §362(c), which now deals specifically with those issues.

                            iii.     "For cause" has been held to include the filing of a bankruptcy petition
                                     by the debtor not undertaken in good faith. As courts of equity,
                                     bankruptcy courts are entitled to ensure their jurisdictional integrity by
                                     requiring that all parties act in good faith. Furthermore, "every
                                     bankruptcy statute since 1898 has incorporated literally, or by judicial
                                     interpretation, a standard of good faith for the commencement,
                                     prosecution, and confirmation of bankruptcy proceedings." One of the
                                     leading cases addressing the bad faith issue is Little Creek




                                                      27
         Development Co. v. Commonwealth Mortgage Corp. (In re Little
         Creek Development Co.), 779 F.2d 1068 (5th Cir. 1986).

         Little Creek involved a creditor's section 362(d)(1) motion for relief
         from the automatic stay. The bankruptcy court granted the motion when
         the debtor's counsel admitted that the bankruptcy petition had been
         filed because the debtor was unable to post a bond necessary to
         continue an injunction in state court to block a foreclosure action on the
         debtor's real estate. The bankruptcy court found that the debtor's filing
         was in "bad faith" and granted the creditor's motion for relief from the
         automatic stay "for cause."

         The Fifth Circuit, affirming the bankruptcy court, held that a "good
         faith" requirement is superimposed on all bankruptcy proceedings. The
         purpose of this requirement is to prevent the abuse of the bankruptcy
         process by debtors whose motives are questionable and to "insure the
         jurisdictional integrity of the bankruptcy courts." The existence of at
         least some of the following factors is indicative of a debtor's "bad
         faith":

                  (1) One asset, such as a tract of undeveloped or developed
                  property;
                  (2) Secured creditors' liens encumber the single asset;
                  (3) No employees except for the principals;
                  (4) Little or no cash flow;
                  (5) No available sources of income to sustain a plan of
                  reorganization or to make adequate protection payments;
                  (6) Few, if any, unsecured creditors with relatively small
                  claims;
                  (7) Allegations of wrongdoing on the part of the principals;
                  (8) The property has been posted for foreclosure because of
                  arrearages on the debt and the debtor has been unsuccessful in
                  defending actions against the foreclosure in state court.

It is essential to remember that the cornerstone policy of the bankruptcy laws is
"the rehabilitation of an ongoing business", and when one or more of the above
factors are present, this policy is thwarted.

iv.      Some courts have even held that the filing of a bankruptcy petition
         undertaken solely to prevent foreclosure constitutes bad faith on the
         part of the debtor. See Central Bank v. Zed, Inc. (In re Zed, Inc.), 20
         Bankr. 462 (Bankr. N.D. Cal. 1982); Polkin, Inc. v. Lotus Invs., Inc. (In
         re Lotus Invs., Inc.), 16 Bankr. 592 (Bankr. S.D. Fla. 1981); In re G-2
         Realty Trust, 6 Bankr. 549 (Bankr. D. Mass. 1980).

v.       Other malfeasance

         a.       Presence of the "new debtor syndrome."

                  In re Schmitt Farm Partnership, 161 B.R. 429 (N.D. Ill. 1993)
                  (court recognizes "new debtor syndrome" whereby debtor
                  transfers certain of its assets prior to the filing of its
                  bankruptcy petition as separate grounds for relief from stay).
                  See also In re Laguna Associates Ltd. Partnership, 30 F.3d
                  734, 25 Bankr. Ct. Dec. (CRR) 1492, 31 Collier Bankr. Cas.
                  2d (MB) 545, Bankr. L. Rep. (CCH) ¶75997, 1994 FED App.



                          28
                                 270P (6th Cir. 1994)(bad faith case; court emphasizes creation
                                 of new corporation just prior to bankruptcy).

2.   Lack of equity in property (but usually dealt with in conjunction with motion under
     362(d)(2))

3.   Liquidation of claims

4.   Litigation in which other court possesses unique or special knowledge (but usually dealt
     with in conjunction with abstention motion or motion to remand)

5.   Legal title to property has passed into the estate but another party holds the equitable title.

              "Cause" for stay relief may be found in many situations, including the situation
              where naked legal title to property has passed into the estate but the equitable
              title is held by another party. In re Moore, 2001 WL 1110524
              (Bankr.E.D.Pa.,2001)

6.   Litigation in which case has proceeded to just before or at trial (but usually dealt with in
     conjunction with abstention motion or motion to remand)

     In the event that a case in state or federal court has gone so far that it would be injurious
     to other parties to require that the litigation be recommenced before the bankruptcy judge,
     the court may deem it appropriate to modify the automatic stay to permit continuation of
     the litigation in the other forum to the point of judgment, provided that no judgment may
     be asserted against the estate of the debtor.

              Relief from stay may be granted where it is necessary to permit litigation to be
              concluded in another forum, particularly if non-bankruptcy suit involves
              multiple parties or is ready for trial. In re Mid-Atlantic Handling Systems, LLC,
              304 B.R. 111 (Bankr.D.N.J.,2003)

              Although "cause" is not defined in Bankruptcy Code's automatic stay provision,
              a desire to permit an action to proceed to completion in another tribunal may
              provide cause for stay relief. Mooney v. Gill, 2002 WL 32515841
              (N.D.Tex.Fort.Worth.Div.,2002)

              In re Newpower, 233 F.3d 922 (6th Cir. 2000) (cause existed for relief from the
              automatic stay to allow embezzlement victims to continue prepetition state court
              action to trace stolen funds and obtain a judgment of constructive trust against
              debtor, notwithstanding an earlier decision, which held that property held
              pursuant to a constructive trust is only excluded from a debtor's bankruptcy
              estate when a constructive trust is impressed pre-petition);

              In re Blan, 237 B.R. 737 (Bankr. 8th Cir. 1999) (cause existed for relief from
              stay to allow plaintiff hospital's state court action to continue, where substantial
              issues of state law existed, parties had already engaged in substantial written
              discovery, pertinent witnesses and documents were located in jurisdiction where
              state action was pending, and substantial risk of duplication existed in that
              bankruptcy court lacked jurisdiction over co-defendants);

              In re Conejo Enterprises, Inc., 96 F.3d 346, 29 Bankr. Ct. Dec. (CRR) 749, 36
              Collier Bankr. Cas. 2d (MB) 822 (9th Cir. 1996) (appellate court reverses
              district court which held that cause from the stay is established once the
              bankruptcy court finds that mandatory abstention applies to an underlying state
              action);



                                         29
              In re Loudon, 284 B.R. 106 (B.A.P. 8th Cir. 2002) (cause existed for relief from
              automatic stay to allow party to file counter-claim against debtor co-defendant).

7.   Failure to perform his or her stated intent of surrendering/redeeming collateral, or of
     reaffirming debt. (This ground is now covered by statutory amendments to §362(h))

              Relief from automatic stay is preferred remedy for debtor's failure to perform his
              or her stated intent of surrendering/redeeming collateral, or of reaffirming debt,
              and is appropriate for any "garden variety" instance of noncompliance by debtor.
              In re Rathbun, 275 B.R. 434 (Bankr.D.R.I.,2001)

8.   Litigation in which Debtor is insured - Plaintiffs who want to name the debtor in a
     lawsuit in order to seek payment under an insurance policy.

              The Bankruptcy Code provides that the court may terminate, annul, modify, or
              condition the automatic stay for cause with regard to the action sought. Such
              cause might be either an absence of harm to the estate or severe harm to the
              creditor or other parties in interest. The estate will not be harmed if, for
              example, adequate insurance coverage exists with regard to the claim of a
              creditor (for example, a tort creditor). The case is changed if potential tort
              claims exceed the insurance coverage. See, e.g., A.H. Robins Co., Inc. v.
              Piccinin, 788 F.2d 994, 14 Bankr. Ct. Dec. (CRR) 752, 15 Collier Bankr. Cas.
              2d (MB) 235, Bankr. L. Rep. (CCH) ¶71094 (4th Cir. 1986).Ordinarily, subject
              to some restrictions on the rights of the creditor to assert its resulting judgment
              against a party other than the insurance company, a bankruptcy court will
              provide relief from the automatic stay to permit the creditor to pursue its claim.

              Cause for lifting the stay exists when the debtor is fully covered by insurance
              and his estate is protected and will not be jeopardized by the continuation of a
              personal injury action. Matter of Holtkamp, 669 F.2d 505, 8 Bankr. Ct. Dec.
              (CRR) 957, 5 Collier Bankr. Cas. 2d (MB) 1412, Bankr. L. Rep. (CCH) ¶68598
              (7th Cir. 1982); Matter of McGraw, 18 B.R. 140, 6 Collier Bankr. Cas. 2d (MB)
              257 (Bankr. W.D. Wis. 1982).

9.   Claims of dischargability

              In addition, a court may lift the automatic stay to permit a party to proceed with
              an action to assert claims against the debtor that are nondischargeable in
              bankruptcy. See, e.g., Bryant v. Straup (In re Straup), 90 BR 481, 483-484 (D.
              Utah 1988) (personal injury action against debtor for injuries sustained when
              debtor was driving while intoxicated); In re Moralez, 128 BR 526, 528-529
              (Bankr. ED Mich. 1991) (alimony and support claims against debtor). In fact, if
              a party obtains a judgment of nondischargability in an adversary proceeding, the
              party may commence proceedings against the collateral without seeking relief
              from the automatic stay to enforce the judgment. Boatmen's Bank v. Embry (In
              re Embry), 10 F3d 401, 403-404 (6th Cir. 1993).

              However, a bankruptcy court did not abuse its discretion in denying creditor's
              request for relief from automatic stay to prosecute claim against professional
              disciplinary commission fund, since dischargeability of indebtedness was
              subject to pending litigation before bankruptcy court and distraction to debtor in
              defending in proceeding before fund would have adversely impacted his efforts
              to reorganize under Chapter 11. In re Wintroub, 283 B.R. 743, 40 Bankr. Ct.
              Dec. (CRR) 69, Bankr. L. Rep. (CCH) ¶78733 (B.A.P. 8th Cir. 2002).




                                        30
9.    Asset not needed for an effective reorganization

10.   Failure to afford secured creditor adequate protection (but usually dealt with in
      conjunction with motion under 362(d)(2))

               Section 362(d)(1) states that relief from the stay may be granted "for cause,
               including the lack of adequate protection of an interest in property..." "Cause" is
               not defined under the Bankruptcy Code, but "cause," as the statute provides,
               does include the lack of adequate protection. The term adequate protection is not
               defined in the Bankruptcy Code. Cause for relief from stay most often means
               that the lender's interest in the real property security is not adequately protected.

               11 U.S.C. § 361 gives examples of what might constitute adequate protection.
               Adequate protection must be afforded to secured creditors, and certain other
               parties, to protect against the diminution in the value of their collateral. The lack
               of adequate protection may appear where the lender's collateral is declining in
               value below the amount owed, and the debtor is unable to make payments to the
               lender to offset the declining value. In that situation the court probably would
               grant relief from stay for cause because of the lack of adequate protection under
               § 362(d)(1).

               Therefore, adequate protection requirements in the Code may be satisfied, as to
               collateral, and relief for cause probably will not be given if the debtor insures
               the property, if the debtor makes payments to offset declining value, if the
               debtor gives a replacement lien on other property with equity, or if there is
               sufficient equity left in the real property security itself -- an "equity cushion" --
               to ensure that the value of the lender's security interest is not eroding.

               See, e.g., In re Timbers of Inwood Forest Associates, Ltd., 793 F.2d 1380, 1406
               (5th Cir. 1986), reh'g granted, 802 F.2d 777 (5th Cir. 1986) and on reh'g, 808
               F.2d 363 (5th Cir. 1987), cert. granted, 481 U.S. 1068, 107 S. Ct. 2459, 95 L.
               Ed. 2d 868 (1987) and judgment aff'd, 484 U.S. 365, 108 S. Ct. 626, 98 L. Ed.
               2d 740 (1988); In re Shriver, 33 B.R. 176, 181 (Bankr. N.D. Ohio 1983) (finding
               lack of adequate protection is illustrative of cause for granting relief.); Martin v.
               United States (In re Martin), 761 F.2d 472 (8th Cir. 1985) (finding that
               determination of adequate protection is a question of fact); Crocker Nat'l Bank
               v. American Mariner Indus. (In re American Mariner Indus., Inc.); 734 F.2d
               426, 435 (9th Cir. 1984) (concluding that sections 361 and 362(d) of the
               Bankruptcy Code were drafted to "insure that the secured creditor receives the
               benefit of its bargain"); In re Greives, 81 B.R. 912, 963 (Bankr. N.D. Ind. 1987)
               ("[A]dequate protection must be afforded by the debtors to the Bank to keep the
               stay in effect.").

11.   Failure to pay taxes on the property.

12.   Failure to maintain and preserve collateral.

13.   Property not insured

               If the lender's real property security is uninsured, for example, that may provide
               sufficient cause to justify granting relief from the stay because of the risk of
               destruction.

14.   Intellectual property rights




                                          31
               A licensor who can terminate the bankrupt licensee's nonassumable license
               under § 365(e)(2) is an example of a party who should be able to show the
               necessary "cause." Matter of West Electronics Inc., 852 F.2d 79, 82-84, 18
               Bankr. Ct. Dec. (CRR) 287, Bankr. L. Rep. (CCH) P 72351, 34 Cont. Cas. Fed.
               (CCH) P 75526 (3d Cir. 1988)

               However, absent a threatened property right, a creditor cannot claim "cause" for
               relief because of the substantial injury it will suffer from not being allowed to
               exercise an ipso facto clause in the contract. In re Mirant Corp., 303 B.R. 319,
               330-31, 42 Bankr. Ct. Dec. (CRR) 96 (Bankr. N.D. Tex. 2003) (fact that creditor
               stands to lose substantial amount if debtor can delay no-risk decision to accept
               or reject is not sufficient for § 362(d)(1) "cause").

               Furthermore, "cause" for relief is not shown every time a nonbankrupt licensor
               or franchisor has an equitable right to enforce a covenant in the license that is
               not cut off in bankruptcy. In Matter of Udell, 18 F.3d 403, 407-08, 30 Collier
               Bankr. Cas. 2d (MB) 1192, Bankr. L. Rep. (CCH) P 75752 (7th Cir. 1994).

15.   Waste or mismanagement of property.

16.   The delay or failure to confirm a plan of reorganization within a reasonable period of
      time.

               Matter of Certified Mortg. Corp., 19 B.R. 369, Bankr. L. Rep. (CCH) ¶68751
               (Bankr. M.D. Fla. 1982) (unreasonable delay in confirming plan "cause" for stay
               relief); Schmidt Indus., Inc. v. Schreiber (In re Schreiber), 14 BR 1013, 1014
               (Bankr. SD Fla. 1981).

17.   The lack of interference or connection with the pending Title 11 case.

      a.       divorce action or child custody proceedings; (see new 362(b)(2))
      b.       probate proceeding where the debtor is an executor or administrator of the estate
               of another;
      c.       proceedings in which the debtor is a fiduciary;
      d.       proceedings involving postpetition activities.

18.   Debtor's lease is terminated prior to commencement of the case. (Now covered by new
      statutory amendments under BACCPA)

               In re Syndicom Corp., 268 B.R. 26 (Bankr. S.D. N.Y. 2001) (landlord was
               entitled to relief from the automatic stay for cause where debtor's lease had
               terminated prepetition pursuant to applicable state law, notwithstanding
               possibility that termination could be vacated); In re Cowboys, Inc., 24 B.R. 15
               (Bankr. S.D. Fla. 1982); In re Autobahn Classics, Inc., 29 B.R. 625, 10 Bankr.
               Ct. Dec. (CRR) 568 (Bankr. S.D.N.Y. 1983); In re GSVC Restaurant Corp., 10
               B.R. 300, 6 Bankr. Ct. Dec. (CRR) 295, 1 Collier Bankr. Cas. 2d (MB) 991,
               Bankr. L. Rep. (CCH) ¶67408 (S.D.N.Y. 1980); In re Acorn Investments, 8 B.R.
               506, 7 Bankr. Ct. Dec. (CRR) 135, Bankr. L. Rep. (CCH) ¶67927 (Bankr. S.D.
               Cal. 1981); Matter of Mimi's of Atlanta, Inc., 5 B.R. 623, 6 Bankr. Ct. Dec.
               (CRR) 807, 2 Collier Bankr. Cas. 2d (MB) 805 (Bankr. N.D. Ga. 1980), aff'd
               and remanded, 11 B.R. 710 (N.D. Ga. 1981); In re Aries Enterprises, Ltd., 3
               B.R. 472, 6 Bankr. Ct. Dec. (CRR) 280, 1 Collier Bankr. Cas. 2d (MB) 1069, 29
               U.C.C. Rep. Serv. 667 (Bankr. D.D.C. 1980); Matter of Racing Wheels, Inc., 5
               B.R. 309, 6 Bankr. Ct. Dec. (CRR) 719 (Bankr. M.D. Fla. 1980); In re
               Butchman, 4 B.R. 379, 6 Bankr. Ct. Dec. (CRR) 403, 2 Collier Bankr. Cas. 2d
               (MB) 174, Bankr. L. Rep. (CCH) ¶67454 (Bankr. S.D.N.Y. 1980). The



                                         32
               Butchman case was quoted with approval in Matter of Triangle Laboratories,
               Inc., 663 F.2d 463, 468, 8 Bankr. Ct. Dec. (CRR) 317, 5 Collier Bankr. Cas. 2d
               (MB) 517, Bankr. L. Rep. (CCH) ¶68391 (3d Cir. 1981): "When a debtor's legal
               and equitable interests in property are terminated prior to the filing of the
               petition with the bankruptcy court that was intended to preserve the debtor's
               interest in such property, the bankruptcy court cannot then cultivate rights where
               none can grow."

19.   Where state law allows relating back

               In re McCord, 219 B.R. 251 (Bankr. E.D. Ark. 1998) (contractor granted relief
               from the stay so that it could perfect its mechanics' lien under state law by filing
               a complaint in state court; court granted relief because state law provided for
               "relation back" perfection of such liens)

               In re Applewhite, 106 B.R. 468 (Bankr. S.D. Miss. 1989) (recordation of
               sheriff's deed postpetition did not violate automatic stay where foreclosure sale
               had terminated debtor's interest in property).

20.   The trustee's failure to comply with state laws.

      In re Charles George Land Reclamation Trust, 30 B.R. 918, 10 Bankr. Ct. Dec. (CRR)
      839, 8 Collier Bankr. Cas. 2d (MB) 1307 (Bankr. D. Mass. 1983).

21.   Secured creditors who want to foreclose on their collateral.

22.   Contract parties who want to terminate contracts.

23.   Failure to comply with the Bankruptcy Code's provisions.

      Farmers & Merchants Bank & Trust, 28 BR at 394.

24.   Failure to pay post-petition taxes and disclose a bank account on schedules.

      In re McMartin Indus., Inc., 62 BR 718, 723 (Bankr. D. Neb. 1986).

25.   Failure to follow a court order.

      Brand Assocs. v. CGR, Ltd. (In re CGR, Ltd.), 56 BR 305, 307 (Bankr. SD Tex. 1985).

26.   Creditors right to setoff (also see §362(b)(6)(7)(17) & (27) for specific setoff rights not
      subject to the stay at all)

      Under Section 362(d)(1)'s "for cause" standard, a party may also seek to lift the stay to
      pursue litigation against the debtor or to set off prepetition amounts owed to the party by
      the debtor. The Bankruptcy Code permits a creditor to offset a mutual debt owed to it by
      the debtor from any claim made by the debtor against the creditor. §553(a). The creditor
      seeking to set off a mutual debt faces several problems. First, to set off such a debt, the
      creditor must obtain relief from the automatic stay.

      Existence of mutual obligations subject to setoff constitutes sufficient "cause" to meet
      creditor's initial evidentiary burden in seeking relief from automatic stay. In re Nuclear
      Imaging Systems, Inc., 260 B.R. 724 (Bankr. E.D. Pa. 2000).

      It is worthwhile to note that, unlike setoff, the automatic stay does not apply to a
      recoupment action by the creditor. Lee v. Schweiker, 739 F2d 870, 875 (3d Cir. 1984);



                                          33
                   Fiero Prod., Inc. v. Conoco, Inc. (In re Fiero Prod., Inc.), 102 BR 581, 586 (Bankr. WD
                   Tex. 1989). A recoupment occurs when the creditor seeks to offset a debt arising from the
                   same transaction as the debtor's claim or cause of action against the creditor. Styler v.
                   Jean Bob, Inc. (In re Concept Clubs, Inc.), 154 BR 581, 586 (D. Utah 1993). Thus, a
                   creditor may seek recoupment against the debtor without seeking to lift the automatic
                   stay.

                   If, however, prior to obtaining relief, the creditor relinquishes control of the property it
                   owes to the debtor, it may waive its post-petition setoff rights. Yet, if the creditor refuses
                   to release the debtor's property, or "freezes" the debtor's accounts, it may run afoul of the
                   automatic stay and subject itself to sanctions. This appears to be subject to a significant
                   division of authority. Id. Compare In re Mohar, 140 BR 273, 276 (Bankr. D. Mont. 1992)
                   (finding that Federal Home Mortgage Corporation's administrative freeze violated
                   automatic stay) with In re Waco Oil Co., 137 BR 544, 546 (Bankr. MD Fla. 1992)
                   (reasoning that a prepetition administrative freeze is not a violation of the automatic
                   stay). As an exception, a creditor is entitled to freeze a debtor's accounts that are subject
                   to a security interest held by a third party. In such a situation, the accounts would
                   constitute cash collateral of the third party that the debtor could not use without the
                   bankruptcy court's approval. If a creditor believes it possesses setoff rights, it should
                   proceed expeditiously and file a motion for relief for cause at the outset of the debtor's
                   case.

          On the other hand, the debtor's mere failure to meet loan obligations or rent payments, In re
Dabney, 45 BR 312, 313 (Bankr. ED Pa. 1985) (finding that the debtor's failure to pay rent for three months
did not provide cause to lift the automatic stay), or a delay of the creditor's assertion of its rights, Prudential
Life Ins. Co. v. Madison Hotel Assocs. (In re Madison Hotel Assocs.), 18 BR 218, 219 (Bankr. WD Wisc.
1982) (finding the creditor's "loss" due to delay in assertion of rights not "cause" under Section 362(d)(1)),
frequently does not provide cause to lift the automatic stay.

III.     What is the standard for a court to apply when stay relief is requested for cause to complete
         litigation in other forum

         1.        Three sets of tests have developed

                   Author believes first test is most comprehensive and covers all the circumstances
                   that courts around the country have identified.

                   "Cause" may exist to lift or modify stay when necessary to permit pending litigation to be
                   concluded in another forum. Among factors which bankruptcy court may consider when
                   deciding whether to lift stay to permit pending litigation to continue in another forum are
                   the so-called following factors: (1) whether stay relief to allow this litigation to continue
                   will result in partial or complete resolution of issues; (2) lack of any connection, or
                   interference, with bankruptcy case; (3) whether foreign proceeding involves the debtor as
                   fiduciary; (4) whether specialized tribunal has been established to hear particular cause of
                   action; (5) whether debtor's insurer has assumed full financial responsibility for
                   defending litigation; (6) whether litigation essentially involves third parties, and debtor
                   functions only as bailee or conduit; (7) whether litigation will prejudice interests of other
                   creditors, creditors' committee, and other interested parties; (8) whether judgment claim
                   arising from the foreign action is subject to equitable subordination; (9) whether movant's
                   success in foreign proceeding would result in judicial lien avoidable by debtor; (10)
                   interests of judicial economy; (11) whether foreign proceeding has progressed to point
                   that parties are prepared for trial; and (12) impact of stay on parties and balance of the
                   hurt. All of these factors bearing on propriety of lifting stay to permit pending litigation
                   to continue in another forum are not relevant in every case, nor is court required to give
                   each of these factors equal weight in making its decision. In re Plumberex Specialty
                   Products, Inc., 2004 WL 1541619 (Bankr.C.D.Cal.,2004); See also, In re Enron Corp.,



                                                        34
306 B.R. 465 (Bankr.S.D.N.Y.,2004); In re Curtis, 40 B.R. 795, 799-800 (Bankr. Utah
1984).

Among factors that bankruptcy courts consider when deciding whether to lift stay to
allow litigation to proceed in another forum are the following: (1) whether relief would
result in partial or complete resolution of issues; (2) whether litigation in another forum
would prejudice interests of other creditors; (3) interests of judicial economy and
expeditious and economical resolution of litigation; (4) whether parties are ready for trial
in other proceeding; and (5) impact of stay on parties and balance of harms. In re
Erickson, 2005 WL 2415942 (Bankr.D.Conn.,2005)

Bankruptcy courts have wide discretion in weighing the factors and determining what
constitutes "cause" to annul stay. Three factors to be considered on motion to lift stay for
"cause" to allow/validate state court litigation are (1) whether issues in case involve only
state law, so that expertise of bankruptcy court is unnecessary; (2) whether modifying
stay will promote judicial economy and whether there would be greater interference with
bankruptcy case if stay were not lifted because matters would have to be litigated in
bankruptcy court; and (3) whether estate can be protected properly by a requirement that
creditors seek enforcement of any judgment through bankruptcy court. Shaw v. Ehrlich,
294 B.R. 260 (W.D. Va. 2003).

         a.       Cost of litigation not enough to prevent stay relief

                           While the factors for court to consider in deciding whether to
                           lift automatic stay to allow prepetition litigation against debtor
                           to proceed in state forum are: (1) judicial economy; (2) trial
                           readiness; (3) resolution of preliminary bankruptcy issues; (4)
                           creditor's chance of success on merits; and (5) cost of defense
                           or other potential burden to bankruptcy estate and impact of
                           litigation on other creditors., the mere cost to debtor of
                           defending litigation in non-bankruptcy forum is ordinarily
                           considered an insufficient basis for refusing to lift automatic
                           stay to permit litigation to proceed. In re Wiley, 288 B.R. 818
                           (BAP.8.Mo.,2003)

                           Cost of defending litigation does not, by itself, constitute
                           "great prejudice," of kind precluding relief from automatic
                           stay. In re Deep, 279 B.R. 653 (Bankr.N.D.N.Y.,2002)

         b.       That relief not available to litigant in bankruptcy court might be
                  available in another forum is not sufficient cause

                           Mere fact that relief which is not available to litigant in
                           bankruptcy court conceivably might be available in another
                           forum is not, in and of itself, sufficient to require bankruptcy
                           court to lift injunction or stay; rather, bankruptcy court is
                           entitled to consider not only the nature of remedies that might
                           be available in parallel non-bankruptcy proceeding, but also
                           the substantiality of asserted claim and effect of granting the
                           exception on bankruptcy case as whole. In re Boston Regional
                           Medical Center, Inc., 410 F.3d 100 (C.A.1.Mass.,2005)

         c.       Probability of success on merits as affecting "cause"

                           In determining whether to grant relief from automatic stay,
                           Bankruptcy Court was not required to consider whether



                                   35
                                         plaintiffs had demonstrated probability of success on merits of
                                         action; to require merits analysis in every case would, in large
                                         part, defeat goal of permitting claim liquidation to economize
                                         judicial resources and would frustrate effort to resolve 11
                                         USCA § 362(d) motions expeditiously. In re Peterson, 116
                                         B.R. 247 (D. Colo. 1990).

                                         Relief from the stay to proceed with a state court action may
                                         be granted where no great prejudice to debtor will result from
                                         its continuance, where hardship will inure to nondebtor if
                                         relief is not granted, and where creditor has some chance of
                                         prevailing. In re Levitz Furniture Inc., 267 B.R. 516, 45
                                         Collier Bankr. Cas. 2d (MB) 231 (Bankr. D. Del. 2000).

                                         To grant motion for relief from stay to allow lawsuit to
                                         continue in state court where it is pending, bankruptcy court
                                         need not determine that movant will prevail on his claims,
                                         only that probability of success has been demonstrated. In re
                                         Williams, 302 B.R. 923 (Bankr. M.D. Ga. 2003).
      2.      Case by Case Analysis

                       To determine whether "cause" exists for relief from automatic stay, bankruptcy
                       court applies "totality of the circumstances" test and considers issue on case-by-
                       case basis. In re Shultz, 95 A.F.T.R.2d 2005-2277 (Bankr.N.D.Ohio.,2005)

IV.   Pre-petition waivers of automatic stay

      a.       Some courts have upheld stay waivers in broad terms. In re Citadel Properties, Inc., 86
      B.R. 275 (Bankr. M.D. Fla. 1988); In In re Club Tower, L.P., 138 B.R. 307 (Bankr. N.D. Ga.
      1991); In re Hudson Manor Partners, Ltd., 28 Collier Bankr. Cas. 2d (MB) 221 (Bankr. N.D. Ga.
      1991).

              i.       In re Frye, 2005 WL 820255 (Bankr.D.Vt.,2005).

                                Although prepetition waivers of automatic stay are not per se
                                enforceable, sound public policy grounds exist, in certain
                                circumstances, for their enforcement.

                                In assessing factors bearing on whether debtor's prepetition waiver of
                                protections of automatic stay should be enforced, bankruptcy court
                                must decide, on case-by-case basis what weight is to be given to each
                                factor, based on the equities, facts and circumstances presented.

                                Although prepetition agreements waiving the protection of automatic
                                stay may be enforced in appropriate case, such waivers are neither per
                                se enforceable nor self-executing.

                                Factors that bankruptcy court must consider in deciding whether to
                                enforce a prepetition waiver of protections of automatic stay are as
                                follows: (1) sophistication of party making the waiver; (2)
                                consideration for waiver, including creditor's risk and period of time
                                covered by waiver; (3) effect of enforcement on other parties, including
                                unsecured creditors and junior lienholders; (4) feasibility of debtor's
                                plan; (5) whether there is evidence that waiver was obtained by
                                coercion, fraud or mutual mistake of material facts; (6) whether
                                enforcement will further legitimate public policy of encouraging out-



                                                 36
                               of-court restructurings and settlements; (7) whether there appears to be
                               likelihood of reorganization; (8) extent to which creditor would be
                               prejudiced if waiver were not enforced; (9) proximity in time between
                               date of waiver and date of debtor's bankruptcy filing and whether there
                               was any compelling change in debtor's circumstances in interim; and
                               (10) whether debtor has equity in property and creditor is otherwise
                               entitled to relief from stay.

                               In assessing the factors bearing on whether debtor's prepetition waiver
                               of protections of automatic stay should be enforced, bankruptcy court
                               must decide, on case-by-case basis what weight is to be given to each
                               factor, based on the equities, facts and circumstances presented.

                               Bankruptcy court will enforce prepetition waiver of debtor's right to
                               protections of automatic stay, even if debtor's bankruptcy filing is not
                               in bad faith, and even if debtor has some equity in property which
                               would typically negate availability of relief from stay, where other
                               compelling factors are present.

                               While creditor need not establish grounds for relief from automatic stay
                               as prerequisite to bankruptcy court's enforcement of prepetition waiver
                               of protections of stay, whether creditor would otherwise be entitled to
                               relief from stay is factor that bankruptcy court must consider in
                               deciding whether such a waiver should be enforced.

             ii.      In re Desai, 2002 WL 1832864 (Bankr.M.D.Ga.Albany.Div.,2002)

                               Although prepetition agreements waiving protection afforded by
                               automatic stay are enforceable in appropriate case, they are not
                               enforceable per se, nor are they self-executing.

                               Factors that bankruptcy court should consider when deciding whether
                               to grant relief from stay based upon prepetition waiver of stay's
                               protections are as follows: (1) sophistication of party making the
                               waiver; (2) consideration that debtor received for waiver, including
                               creditor's risk and length of time the waiver covers; (3) whether other
                               parties are affected, including unsecured creditors and junior
                               lienholders; and (4) feasibility of debtor's plan.

     b.      Other courts have held otherwise and found that the protections of the automatic stay may
             not be waived, and its scope may not be limited by debtor. In re Askew, 312 B.R. 274
             (Bankr.D.N.J.,2004); In re Izzi, 295 B.R. 754 (E.D.Pa.,2003) (Automatic stay cannot be
             waived).

V.   Applicable Rules of Bankruptcy Procedure

             To seek relief from the automatic stay, a party must file a motion under Bankruptcy Rule
             4001(a) in the bankruptcy court in which the debtor's petition was filed. Rule 4001(a)
             provides that the motion shall be made "in accordance with [Bankruptcy] Rule 9014."
             Rule 9014 states that "[i]n a contested matter ... relief shall be requested by motion, and
             reasonable notice and opportunity for hearing shall be afforded the party against whom
             relief is sought." Because a motion for relief from the automatic stay is treated as a
             contested matter rather than an adversary proceeding, "[n]o response is required ... unless
             the court orders an answer to a motion."




                                                37
     At this point, the importance of understanding the local rules of practice cannot be
     overstated. In many instances, the local rules of practice may impose additional time
     constraints and pleading requirements not contained in the Federal Rules of Bankruptcy
     Procedure. Nevertheless, although it is not treated as an adversary proceeding, the party
     seeking relief must provide service of the motion as required by Rule 7004, which
     governs service in adversary proceeding. Although the motion must be served as
     provided for under Rule 7004, the debtor is not required to file a response unless the
     court orders otherwise. Furthermore, the court may use any of the rules applicable to
     adversary proceedings if the court believes it would be appropriate. The motion must
     state with particularity the grounds for relief.

1.   Bankruptcy Rule 4001. Relief from Automatic Stay; …

     (a) Relief from stay; …

              (1) Motion

              A motion for relief from an automatic stay provided by the Code … shall be
              made in accordance with Rule 9014 and shall be served on any committee
              elected pursuant to § 705 or appointed pursuant to § 1102 of the Code or its
              authorized agent, or, if the case is a chapter 9 municipality case or a chapter 11
              reorganization case and no committee of unsecured creditors has been appointed
              pursuant to § 1102, on the creditors included on the list filed pursuant to Rule
              1007(d), and on such other entities as the court may direct.

              (2) Ex parte relief

              Relief from a stay under § 362(a) … may be granted without prior notice only if
              (A) it clearly appears from specific facts shown by affidavit or by a verified
              motion that immediate and irreparable injury, loss, or damage will result to the
              movant before the adverse party or the attorney for the adverse party can be
              heard in opposition, and (B) the movant's attorney certifies to the court in
              writing the efforts, if any, which have been made to give notice and the reasons
              why notice should not be required. The party obtaining relief under this
              subdivision and § 362(f) … shall immediately give oral notice thereof to the
              trustee or debtor in possession and to the debtor and forthwith mail or otherwise
              transmit to such adverse party or parties a copy of the order granting relief. On
              two days notice to the party who obtained relief from the stay without notice or
              on shorter notice to that party as the court may prescribe, the adverse party may
              appear and move reinstatement of the stay or reconsideration of the order
              prohibiting or conditioning the use, sale, or lease of property. In that event, the
              court shall proceed expeditiously to hear and determine the motion.

              (3) Stay of order

              An order granting a motion for relief from an automatic stay made in accordance
              with Rule 4001(a)(1) is stayed until the expiration of 10 days after the entry of
              the order, unless the court orders otherwise.

2.   Rule 9014. Contested Matters

     (a) Motion. In a contested matter not otherwise governed by these rules, relief shall be
     requested by motion, and reasonable notice and opportunity for hearing shall be afforded
     the party against whom relief is sought. No response is required under this rule unless the
     court directs otherwise.




                                        38
     (b) Service. The motion shall be served in the manner provided for service of a summons
     and complaint by Rule 7004. Any paper served after the motion shall be served in the
     manner provided by Rule 5(b) F. R. Civ. P.

     (c) Application of Part VII rules. Except as otherwise provided in this rule, and unless the
     court directs otherwise, the following rules shall apply: 7009, 7017, 7021, 7025, 7026,
     7028-7037, 7041, 7042, 7052, 7054-7056, 7064, 7069, and 7071. The following
     subdivisions of Fed. R. Civ. P. 26, as incorporated by Rule 7026, shall not apply in a
     contested matter unless the court directs otherwise: 26(a)(1) (mandatory disclosure),
     26(a)(2) (disclosures regarding expert testimony) and 26(a)(3) (additional pre-trial
     disclosure), and 26(f) (mandatory meeting before scheduling conference/ discovery plan).
     An entity that desires to perpetuate testimony may proceed in the same manner as
     provided in Rule 7027 for the taking of a deposition before an adversary proceeding. The
     court may at any stage in a particular matter direct that one or more of the other rules in
     Part VII shall apply. The court shall give the parties notice of any order issued under this
     paragraph to afford them a reasonable opportunity to comply with the procedures
     prescribed by the order.

     (d) Testimony of witnesses. Testimony of witnesses with respect to disputed material
     factual issues shall be taken in the same manner as testimony in an adversary proceeding.

     (e) Attendance of witnesses. The court shall provide procedures that enable parties to
     ascertain at a reasonable time before any scheduled hearing whether the hearing will be
     an evidentiary hearing at which witnesses may testify.

3.   Rule 7004. Process; Service of Summons, Complaint

              (a) Summons; service; proof of service

                       Rule 4(a), (b), (c)(1), (d)(1), (e)-(j), (l), and (m) F.R.Civ.P. applies in
                       adversary proceedings. Personal service pursuant to Rule 4(e)-(j)
                       F.R.Civ.P. may be made by any person at least 18 years of age who is
                       not a party, and the summons may be delivered by the clerk to any such
                       person.

              (b) Service by first class mail

                       Except as provided in subdivision (h), in addition to the methods of
                       service authorized by Rule 4(e) -(j) F.R.Civ.P., service may be made
                       within the United States by first class mail postage prepaid as follows:

                                 (1) Upon an individual other than an infant or incompetent,
                                     by mailing a copy of the summons and complaint to the
                                     individual's dwelling house or usual place of abode or to
                                     the place where the individual regularly conducts a
                                     business or profession.

                                 (2) Upon an infant or an incompetent person, by mailing a
                                     copy of the summons and complaint to the person upon
                                     whom process is prescribed to be served by the law of the
                                     state in which service is made when an action is brought
                                     against such a defendant in the courts of general
                                     jurisdiction of that state. The summons and complaint in
                                     that case shall be addressed to the person required to be
                                     served at that person's dwelling house or usual place of




                                         39
    abode or at the place where the person regularly conducts
    a business or profession.

(3) Upon a domestic or foreign corporation or upon a
    partnership or other unincorporated association, by
    mailing a copy of the summons and complaint to the
    attention of an officer, a managing or general agent, or to
    any other agent authorized by appointment or by law to
    receive service of process and, if the agent is one
    authorized by statute to receive service and the statute so
    requires, by also mailing a copy to the defendant.

(4) Upon the United States, by mailing a copy of the
    summons and complaint addressed to the civil process
    clerk at the office of the United States attorney for the
    district in which the action is brought and by mailing a
    copy of the summons and complaint to the Attorney
    General of the United States at Washington, District of
    Columbia, and in any action attacking the validity of an
    order of an officer or an agency of the United States not
    made a party, by also mailing a copy of the summons and
    complaint to that officer or agency. The court shall allow
    a reasonable time for service pursuant to this subdivision
    for the purpose of curing the failure to mail a copy of the
    summons and complaint to multiple officers, agencies, or
    corporations of the United States if the plaintiff has
    mailed a copy of the summons and complaint either to the
    civil process clerk at the office of the United States
    attorney or to the Attorney General of the United States.

(5) Upon any officer or agency of the United States, by
    mailing a copy of the summons and complaint to the
    United States as prescribed in paragraph (4) of this
    subdivision and also to the officer or agency. If the
    agency is a corporation, the mailing shall be as prescribed
    in paragraph (3) of this subdivision of this rule. The court
    shall allow a reasonable time for service pursuant to this
    subdivision for the purpose of curing the failure to mail a
    copy of the summons and complaint to multiple officers,
    agencies, or corporations of the United States if the
    plaintiff has mailed a copy of the summons and complaint
    either to the civil process clerk at the office of the United
    States attorney or to the Attorney General of the United
    States. If the United States trustee is the trustee in the case
    and service is made upon the United States trustee solely
    as trustee, service may be made as prescribed in
    paragraph (10) of this subdivision of this rule.

(6) Upon a state or municipal corporation or other
    governmental organization thereof subject to suit, by
    mailing a copy of the summons and complaint to the
    person or office upon whom process is prescribed to be
    served by the law of the state in which service is made
    when an action is brought against such a defendant in the
    courts of general jurisdiction of that state, or in the




        40
                      absence of the designation of any such person or office by
                      state law, then to the chief executive officer thereof.

                  (7) Upon a defendant of any class referred to in paragraph (1)
                      or (3) of this subdivision of this rule, it is also sufficient if
                      a copy of the summons and complaint is mailed to the
                      entity upon whom service is prescribed to be served by
                      any statute of the United States or by the law of the state
                      in which service is made when an action is brought
                      against such a defendant in the court of general
                      jurisdiction of that state.

                  (8) Upon any defendant, it is also sufficient if a copy of the
                      summons and complaint is mailed to an agent of such
                      defendant authorized by appointment or by law to receive
                      service of process, at the agent's dwelling house or usual
                      place of abode or at the place where the agent regularly
                      carries on a business or profession and, if the
                      authorization so requires, by mailing also a copy of the
                      summons and complaint to the defendant as provided in
                      this subdivision.

                  (9) Upon the debtor, after a petition has been filed by or
                      served upon the debtor and until the case is dismissed or
                      closed, by mailing a copy of the summons and complaint
                      to the debtor at the address shown in the petition or
                      statement of affairs or to such other address as the debtor
                      may designate in a filed writing and, if the debtor is
                      represented by an attorney, to the attorney at the attorney's
                      post-office address.

                  (10) Upon the United States trustee, when the United States
                       trustee is the trustee in the case and service is made upon
                       the United States trustee solely as trustee, by mailing a
                       copy of the summons and complaint to an office of the
                       United States trustee or another place designated by the
                       United States trustee in the district where the case under
                       the Code is pending.

(c) Service by publication

         If a party to an adversary proceeding to determine or protect rights in
         property in the custody of the court cannot be served as provided in
         Rule 4(e)-(j) F.R.Civ.P. or subdivision (b) of this rule, the court may
         order the summons and complaint to be served by mailing copies
         thereof by first class mail, postage prepaid, to the party's last known
         address, and by at least one publication in such manner and form as the
         court may direct.

(d) Nationwide service of process

         The summons and complaint and all other process except a subpoena
         may be served anywhere in the United States.

(e) Summons: time limit for service within the United States




                          41
                            Service made under Rule 4(e), (g), (h)(1), (i), or (j)(2) F.R.Civ.P. shall
                            be by delivery of the summons and complaint within 10 days after the
                            summons is issued. If service is by any authorized form of mail, the
                            summons and complaint shall be deposited in the mail within 10 days
                            after the summons is issued. If a summons is not timely delivered or
                            mailed, another summons shall be issued and served. This subdivision
                            does not apply to service in a foreign country.

                   (f) Personal jurisdiction

                            If the exercise of jurisdiction is consistent with the Constitution and
                            laws of the United States, serving a summons or filing a waiver of
                            service in accordance with this rule or the subdivisions of Rule 4
                            F.R.Civ.P. made applicable by these rules is effective to establish
                            personal jurisdiction over the person of any defendant with respect to a
                            case under the Code or a civil proceeding arising under the Code, or
                            arising in or related to a case under the Code.

                   (g) [Abrogated]

                   (h) Service of process on an insured depository institution

                            Service on an insured depository institution (as defined in section 3 of
                            the Federal Deposit Insurance Act) in a contested matter or adversary
                            proceeding shall be made by certified mail addressed to an officer of
                            the institution unless—

                                     (1) the institution has appeared by its attorney, in which case
                                     the attorney shall be served by first class mail;

                                     (2) the court orders otherwise after service upon the institution
                                     by certified mail of notice of an application to permit service
                                     on the institution by first class mail sent to an officer of the
                                     institution designated by the institution; or

                                     (3) the institution has waived in writing its entitlement to
                                     service by certified mail by designating an officer to receive
                                     service.
934485_1.DOC
FTL_DB: 934485_1




                                               42

				
DOCUMENT INFO
Description: Bankruptcy Attorneys in Brunswick Ga document sample