Opinion ID: 472139
Heading Depth: 2
Heading Rank: 2

Heading: Criticism of Pre-Code Stay Provisions.

Text: 52 The automatic stay provisions of the Bankruptcy Act had the salutary goal of protection of the estate of the bankrupt against the ravages that would be inflicted on the estate if grab law were allowed to govern. Kennedy, The Automatic Stay in Bankruptcy, 11 U.Mich.J.L.Ref. 175, 187 (1977) [hereinafter cited as Automatic Stay I ]. However, the estate's interests were not overriding; the stay was to be lifted for cause, including material harm to a secured creditor. Thus Congress and the courts attempted to strike a balance between the interests of debtors, unsecured creditors and the public in the rehabilitative process, and secured creditors' rights to foreclose on collateral upon default. 53 In light of the harm that could befall secured creditors due to the stay, the bankruptcy rules provided that stay relief requests were to receive priority in the bankruptcy courts. However, it appears that Congress' aspiration to expedite stay relief litigation was not realized: 54 Unfortunately, it has been said that this provision of the rule is more honored in the breach than in the performance. It may be extremely difficult in an active bankruptcy court to disrupt scheduled proceedings to conform with the requirements of Rule 11-44(d). The intent of this provision, although laudatory, may be incompatible with the actual functioning and operations of the bankruptcy court under the present Act. 55 Miller, supra, 94 Banking L.J. at 704-05. 20 Delay also was due to procedure under the rules. A request for relief from the stay was initiated by a complaint in an adversary proceeding, which caused significant difficulties in the administration of bankruptcy estates, because the debtor often asserted complex affirmative defenses or counterclaims. Peitzman & Smith, The Secured Creditor's Complaint: Relief from the Automatic Stays in Bankruptcy Proceedings, 65 Calif.L.Rev. 1216, 1259 (1977). That, in turn, was said to forestall prompt action on the request for relief from the stay. Kennedy, Automatic Stays Under the New Bankruptcy Law, 12 U.Mich.J.L.Ref. 1, 40 n. 166 (1978) [hereinafter cited as Automatic Stay II ]. 56