The Automatic Stay in Bankruptcy

The filing of a petition under the Bankruptcy Act constitutes an automatic stay of all litigation against the debtor and most acts and actions against the debtor’s property. The stay is one of the most notable features of the Rules of Bankruptcy Procedure promulgated by the Supreme Court. The constitutional and statutory basis for the automatic stay has been challenged, and the propriety and the scope of the stay have been contested and ruled on, in many reported opinions. The need and justification for an automatic stay in bankruptcy and debtor relief cases have been widely acknowledged, and an automatic stay seems certain to be included in any comprehensive bankruptcy reform legislation likely to be enacted by Congress. The role of this procedural device is still sufficiently new, its full implications sufficiently unexplored and unappreciated, and its day-to-day operations and effects sufficiently controversial and unsettled that an article devoted to the automatic stay seems useful at this stage of its development.