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90 Second Lesson: When To Request Relief From the Automatic Stay

Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.

90 Second Lesson: When to Request Relief from the Automatic Stay

QUESTION:

How do I know if I should request relief from a debtor’s automatic stay?

ANSWER:

At the outset of a bankruptcy case, a secured creditor, a party to litigation in another court, or any other party potentially entitled to stay relief must decide whether to request relief from the automatic stay. The factors to be considered in making this decision differ depending on the type of bankruptcy case and the type of stay relief. As explained in further detail by Mark L. Radtke and Peter J. Roberts here, a secured creditor may conclude that the value of its collateral will be enhanced through the continued operation of a debtor’s business, whereas in the alternative, the creditor should promptly seek relief from the stay.

Note: This 90 Second Lesson is based, in substantial part, in material reprinted from Commercial Bankruptcy Litigation 2d and Strategic Alternatives for and Against Distressed Businesses, with permission of Thomson Reuters. For more information about these publications, please visit www.legalsolutions.com.

About The DailyDAC Editors

The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts an similar topics.

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