What is The Automatic Stay in Chapter 11 Bankruptcy?
The automatic stay is an injunction that takes effect immediately upon the filing of a Chapter 11 Bankruptcy Petition. The automatic stay provides a period of time in which all legal actions against the Debtor, which include judgments, collection activities, foreclosures, lawsuits, and repossessions of property are stayed or suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. As with cases under other all other chapters of the Bankruptcy Code, a automatic stay of creditor actions against the chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. The filing of a petition, however, does not operate as a stay for certain types of actions listed under 11 U.S.C. ยง 362(b). The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor’s financial situation. Under specific circumstances, secured creditors ca