Seeking Relief From The Automatic Stay In Delaware

Introduction

As more companies file for bankruptcy, creditors and other interested parties of a debtor must quickly familiarize themselves with the automatic stay. Section 362(a)(1) of the Bankruptcy Code stays "the commencement or continuation … of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement" of a bankruptcy proceeding. Generally speaking, the automatic stay is intended to give the debtor a "breathing spell" from its creditors. To do so, the stay stops various forms of collection efforts against the debtor.

The automatic stay is not without limitations, however. In drafting the Bankruptcy Code, Congress carved out exceptions where the automatic stay does not apply. Further, the Federal Rules of Bankruptcy Procedure provide procedural safeguards for a party seeking relief from the automatic stay. Given the frequency with which automatic stay issues arise in bankruptcy