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1. INTRODUCTION
2. OVERVIEW OF THE AUTOMATIC STAY
1. Section 362(a)
2. Violations of the Automatic Stay
1. Willful Violations and Sanctions
2. Effect of Automatic Stay Violations
3. Exceptions to the Automatic Stay
1. Post-petition Perfection of Security Interest
2. Suits Against Non-Debtor Entities
3. RELIEF FROM THE AUTOMATIC STAY
1. Procedures
2. Modification of Automatic Stay For Cause
1. General Factors Showing Cause
2. Single Asset Debtors
3. Modification of the Automatic Stay for Lack of Equity
4. Adequate Protection
1. Generally
2. Forms of Adequate Protection
3. Adequate Protection of Trust Funds
4. CONCLUSION

For many practitioners an introduction to the bankruptcy court usually comes through a Notice of Bankruptcy Filing or by a phone call from an opposing lawyer informing you of the filing. As related to a construction project, the notice of a bankruptcy filing could come from a number of different parties including the property owner, the general contractor, subcontractor or one of the various materials suppliers for the project. Each of these various parties to the construction project may have different rights and obligations as related to the bankrupt, and most likely as related to each other. The purpose of this paper is to provide the practitioner with a working knowledge of the automatic stay, and to provide insight into the various issues related to the automatic stay and how they affect specific parties to a construction project.

Whether attempting to protect a client from being a creditor in a bankruptcy proceeding or representing a party in a bankruptcy, as a debtor or creditor, the authority given to the bankruptcy court is often perplexing and seemingly inconsistent. The broad statutory authority relating to the bankruptcy courts can cause an array of court decisions. Therefore, issues concerning application of the automatic stay and relief from the automatic stay are likely decided on a case-by-case factual basis, rather than through stare decisis. This article will examine some of the major cases and provide a practical guideline on the current state of law concerning the automatic stay.

The automatic stay of Section 362 provides a powerful weapon to the debtor and can cause confusion as related to rights and responsibilities in an ongoing construction project. The key to obtaining order from the chaos caused by a bankruptcy filing is often a quick response by the nondebtor parties and requests to the bankruptcy court for either relief from the automatic stay or a modification of the stay so that parties are not prejudiced. If relief from the stay is not available under the facts of the particular case, then the focus should shift to whether other judicial proceedings are available for enforcement against parties other than the debtor.

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