Document Type
Research Memorandum
Publication Date
2024
Abstract
(Excerpt)
Upon a filing a petition under title 11 of the United States Code (the "Bankruptcy Code"), all actions against a debtor are generally automatically stayed. While the automatic stay is broad, there are exceptions. Under the regulatory power or police power exception, a governmental unit or organization is not stayed from taking any action "to enforce such governmental unit's or organization's police and regulatory power." Not all actions by a government are immune from the automatic stay. Courts have generally held that an action to effectuate a "public policy" is not stayed, but an action to advance the government’s "'pecuniary interest" is stayed.
This memorandum explores the regulatory power exception of the automatic stay. Part A of this memorandum will describe the subcategories of the regulatory power exception, namely public policy or public welfare actions. For the purposes of this memorandum, the discussion is limited to government actions against corporations in the environmental and employment law spheres, as these are the two major areas where the regulatory exception is asserted. Part B will describe actions in the government's pecuniary interest that do not qualify as exempt.