Abstract

http://ssrn.com/abstract=1448727
 


 



Determining Whether Property Is Necessary for an Effective Reorganization: A Proposal for the Use of Empirical Research


Charles B. Shafer


University of Baltimore - School of Law

1990

Annual Survey of Bankruptcy Law, pp. 79-137, 1990

Abstract:     
The automatic stay is considered to be one of the most important provisions of the Bankruptcy Code for Chapter 11 debtors. It is the shield behind which the debtor may go about the process of reorganization using the mechanisms provided by the other sections of the Code. The stay permits a debtor the time to formulate a repayment or reorganization plan.

Resisting a challenge to the stay is, therefore, often crucial to the reorganizing debtor. By preventing the initiation or pursuit of legal action against a debtor, the stay allows the debtor to devote its limited time and resources to the reorganization process. By preventing creditor seizure of essential property, the stay prolongs the debtor's survival. By the same token where the debtor has no hope of reorganizing in a way to benefit creditors, the stay is a needless interference with the ability of creditors to protect their rights. Where that is the case the stay contributes to what many claim to be a serious problem in the bankruptcy system: The use of Chapter 11 by debtors to fritter away estate assets in a hopeless attempt to revive the business.

For this reason it is not surprising that litigation involving the automatic stay consumes such a large part of the bankruptcy process. This litigation usually takes the form of motions for relief from the stay. The vast majority of cases involving the automatic stay involve efforts by creditors with either contractual or judicial liens to obtain possession of property in the hands of the debtor.

Number of Pages in PDF File: 61

Keywords: automatic stay, Bankruptcy Code, Chapter 11, reorganization plan, creditor seizure, estate assets, contractual liens, judicial liens

JEL Classification: K19, K39, K49, G33, G34

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Date posted: August 15, 2009  

Suggested Citation

Shafer, Charles B., Determining Whether Property Is Necessary for an Effective Reorganization: A Proposal for the Use of Empirical Research (1990). Annual Survey of Bankruptcy Law, pp. 79-137, 1990. Available at SSRN: http://ssrn.com/abstract=1448727

Contact Information

Charles B. Shafer (Contact Author)
University of Baltimore - School of Law ( email )
1420 N. Charles Street
Baltimore, MD 21218
United States
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