Document Type
Research Memorandum
Publication Date
2023
Abstract
(Excerpt)
In most cases, the automatic stay, under section 362 of title 11 of the United States Code (the "Bankruptcy Code"), stays all creditors from pursuing litigation against debtors. Nonetheless, non-debtor entities can obtain the protection afforded to debtors by the automatic stay in limited circumstances. There are two primary ways of staying litigation against a non-debtor. First, through demonstrating that there are exceptional circumstances to extend section 362 to a non-debtor. Second, through satisfying the standard for an injunction pursuant to section 105 of the Bankruptcy Code.
This Article considers the circumstances by which a non-debtor entity may receive the protection of the automatic stay under section 362. Part I discusses the general standard under section 362 — that the automatic stay only extends to debtors. Part II analyzes the main exceptions to the general rule, whereby the automatic stay may be extended to non-debtors. Part III sets forth the injunction standard under section 105, which may be utilized to enjoin actions against a non-debtor.