Source: https://www.law.cornell.edu/uscode/html/uscode11a/usc_sec_11a_00004001----000-notes.html
Timestamp: 2017-08-21 10:43:36
Document Index: 670104856

Matched Legal Cases: ['§ 362', '§ 363', '§ 362', '§ 362', '§ 363', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 361', '§ 362', '§ 362', '§ 362', '§ 363', '§ 102', '§ 364', '§ 363', '§ 362', '§ 1114']

United States Code: Title 11a,Rule 4001. Relief from Automatic Stay; Prohibiting or Conditioning the Use, Sale, or Lease of Property; Use of Cash Collateral; Obtaining Credit; Agreements | LII / Legal Information Institute
TITLE 11 App. > FEDERAL > PART IV > Rule 4001
This rule implements § 362 of the Code which set forth provisions regarding the automatic stay that arises on the filing of a petition. That section and this rule are applicable in chapters 7, 9, 11 and 13 cases. It also implements § 363(c)(2) concerning use of cash collateral.
Subdivision (a) transforms with respect to the automatic stay what was an adversary proceeding under the former rules to motion practice. The Code provides automatic stays in several sections, e.g., §§ 362(a), 1301 (a), and in § 362(d) provides some grounds for relief from the stay. This rule specifies that the pleading seeking relief is by means of a motion. Thus the time period in Rule 7012 to answer a complaint would not be applicable and shorter periods may be fixed. Section 362 (e) requires the preliminary hearing to be concluded within 30 days of it inception, rendering ordinary complaint and answer practice inappropriate.
This subdivision also makes clear that a motion under Rule 9014 is the proper procedure for a debtor to seek court permission to use cash collateral. See § 363(c)(2). Pursuant to Rule 5005, the motion should be filed in the court in which the case in pending. The court or local rule may specify the persons to be served with the motion for relief from the stay; see Rule 9013.
Subdivision (b) of the rule fills a procedural void left by § 362. Pursuant to § 362(e), the automatic stay is terminated 30 days after a motion for relief is made unless the court continues the stay as a result of a final hearing or, pending final hearing, after a preliminary hearing. If a preliminary hearing is held, § 362(e) requires the final hearing to be commenced within 30 days after the preliminary hearing. Although the expressed legislative intent is to require expeditious resolution of a secured party’s motion for relief, § 362 is silent as to the time within which the final hearing must be concluded. Subdivision (b) imposes a 30 day deadline on the court to resolve the dispute.
At the final hearing, the stay is to be terminated, modified, annulled, or conditioned for cause, which includes, inter alia, lack of adequate protection; § 362(d). The burden of proving adequate protection is on the party opposing relief from the stay; § 362(g)(2). Adequate protection is exemplified in § 361.
Subdivision (c) implements § 362(f) which permits ex parte relief from the stay when there will be irreparable damage. This subdivision sets forth the procedure to be followed when relief is sought under § 362(f). It is derived from former Bankruptcy Rule 601 (d).
The scope of this rule is expanded and the former subdivisions (a), (b) and (c) are now combined in subdivision (a). The new subdivision (a)(2) is amended to conform to the 1984 amendments to § 362(e) of the Code.
Subdivision (b) deals explicitly with the procedures which follow after a motion to use cash collateral is made and served. Filing shall be pursuant to Rule 5005. Service of the motion may be made by any method authorized by Rule 7004 and, if service is by mail, service is complete on mailing. Rule 9006 (e). Under subdivision (b)(2), the court may commence a final hearing on the motion within 15 days of service. Rule 9006 (f) does not extend this 15 day period when service of the motion is by mail because the party served is not required to act within the 15 day period. In addition to service of the motion, notice of the hearing must be given. Rule 9007 authorizes the court to direct the form and manner of giving notice that is appropriate to the circumstances.
Section 363 (c)(3) authorizes the court to conduct a preliminary hearing and to authorize the use of cash collateral “if there is a reasonable likelihood that the trustee will prevail at a final hearing.” Subdivision (b)(2) of the rule permits a preliminary hearing to be held earlier than 15 days after service. Any order authorizing the use of cash collateral shall be limited to the amount necessary to protect the estate until a final hearing is held.
Notice of the preliminary and final hearings may be combined. This rule does not limit the authority of the court under § 363(c)(2)(B) and § 102(1).
Subdivision (c) is new. The service, hearing, and notice requirements are similar to those imposed by subdivision (b). The motion to obtain credit shall include the amount and type of the credit to be extended, the name and address of the lender, the terms of the agreement, the need to obtain the credit, and the efforts made to obtain credit from other sources. If the motion is to obtain credit pursuant to § 364(c) or (d), the motion shall describe the collateral, if any, and the protection for any existing interest in the collateral which may be affected by the proposed agreement.
Subdivision (d) is new. In the event the 15 day period for filing objections to the approval of an agreement of the parties described in this subdivision is too long, the parties either may move for a reduction of the period under Rule 9006 (c)(1) or proceed under subdivision (b) or (c), if applicable. Rule 9006 (c)(1) requires that cause be shown for the reduction of the period in which to object. In applying this criterion the court may consider the option of proceeding under subdivision (b) or (c) and grant a preliminary hearing and relief pending final hearing.
Subdivision (a) is expanded to include a request to prohibit or condition the use, sale, or lease of property as is necessary to provide adequate protection of a property interest pursuant to § 363(e) of the Code.
Notice of the motion for relief from the automatic stay or to prohibit or condition the use, sale, or lease of property must be served on the entities entitled to receive notice of a motion to approve an agreement pursuant to subdivision (d). If the movant and the adverse party agree to settle the motion and the terms of the agreement do not materially differ from the terms set forth in the movant’s motion papers, the court may approve the agreement without further notice pursuant to subdivision (d)(4).
Subdivision (a)(2) is deleted as unnecessary because of § 362(e) of the Code.
Subdivisions (b)(1), (c)(1), and (d)(1) are amended to require service on committees that are elected in chapter 7 cases. Service on committees of retired employees appointed under § 1114 of the Code is not required. These subdivisions are amended further to clarify that, in the absence of a creditors’ committee, service on the creditors included on the list filed pursuant to Rule 1007 (d) is required only in chapter 9 and chapter 11 cases. The other amendments to subdivision (d)(1) are for consistency of style and are not substantive.
If the motion papers served under subdivision (a), (b), or (c) do not afford notice sufficient to inform the recipients of the material provisions of the proposed agreement and opportunity for a hearing, approval of the settlement agreement may not be obtained unless the procedural requirements of subdivision (d)(1), (d)(2), and (d)(3) are satisfied. If the 15 day period for filing objections to the approval of the settlement agreement is too long under the particular circumstances of the case, the court may shorten the time for cause under Rule 9006 (c)(1).
Paragraph (a)(3) is added to provide sufficient time for a party to request a stay pending appeal of an order granting relief from an automatic stay before the order is enforced or implemented. The stay under paragraph (a)(3) is not applicable to orders granted ex parte in accordance with Rule 4001 (a)(2).
The court may, in its discretion, order that Rule 4001 (a)(3) is not applicable so that the prevailing party may immediately enforce and implement the order granting relief from the automatic stay. Alternatively, the court may order that the stay under Rule 4001 (a)(3) is for a fixed period less than 10 days.
The rule also provides that any motion for authority to obtain credit must identify any provision listed in subdivision (c)(1)(B)(i)–(xi) that is proposed to remain effective if the court grants the motion on an interim basis under Rule 4001 (c)(2), but later denies final relief.
The rule is amended to implement changes in connection with the amendment to Rule 9006 (a) and the manner by which time is computed under the rules. The deadlines in the rule are amended to substitute a deadline that is a multiple of seven days. Throughout the rules, deadlines are amended in the following manner:
Subdivision (d). Subdivision (d) is amended to implement changes in connection with the 2009 amendment to Rule 9006 (a) and the manner by which time is computed under the rules. The deadlines in subdivision (d)(2) and (d)(3) are amended to substitute deadlines that are multiples of seven days. Throughout the rules, deadlines have been amended in the following manner:
5 day periods become 7 day periods
10 day periods become 14 day periods
15 day periods become 14 day periods
20 day periods become 21 day periods
25 day periods become 28 day periods