Advice for New Bankruptcy Lawyers on Drafting and Litigating Motions for Relief From Stay

A new attorney asked to prepare a motion for relief from stay is really being asked to create and assemble a multitude of different filings, anticipate evidentiary issues, and craft complete and meaningful relief in the proposed order that does not lead to more litigation. Attorneys asked to respond to and defend the motions likewise have more than just a simple response to think about.

Attorneys preparing to argue or defend the motion need to know what kind of evidence will be needed and what is likely to be available and admissible in court. If valuation is an issue, often there is neither the time nor the budget to secure a formal appraisal, so knowing who is qualified to testify as to the value of various kinds of tangible and intangible property is important.

Almost all courts now ask attorneys to submit proposed orders, and these should never be drafted casually. The relief granted should be concrete and clear and encompass all the steps and activities needed to accomplish the creditor's ends. Many attorneys have learned the hard way that relief to foreclose, without more, may not include the right to pay the defaulted debt.

Listen as this panel of bankruptcy experts offers best practices for drafting the necessary papers to obtain relief for the stay and best practices for litigating the requests.

1. Nature and grounds for relief
   • Motions under Section 362(d)(1)--for cause
     • Bad faith other than 362(d)(4)
     • Lack of adequate protection: what it is and is not
     • Types of evidence available early in the case
   • Motions under Section 362(d)(2)
     • Proving lack of equity
       • Definitions of equity
       • Property with volatile value
       • Discovery and obtaining formal valuation
       • Using non-experts to demonstrate value or equity
     • Proving not necessary to an effective reorganization
2. Standing
3. Timing of motion and ability to renew it later; preclusive effects
4. Drafting proposed orders
   • Types of relief available
   • Avoiding ambiguity while retaining flexibility
   • Describing the right to pursue remedies
   • Reserving bankruptcy court jurisdiction
   • Waiver of effective date of order
   • Dealing with potential surpluses
   • "Agreed" or consent orders: "drop dead" or self-executing orders after default
5. Notices of hearings
   • Relelvant rules
   • Addressing and serving non-electronic notices to persons who have not appeared in the case
   • Pitfalls of failing to give correct and complete notice
6. Responding to motions for relief: standing
7. Best practices when arguing the motion

The panel will review these and other key issues:

• Who is a party in interest for purposes of Section 362?
• How does the nature of "cause" change as the case progresses?
• When do state courts have concurrent jurisdiction over whether the automatic stay remains in effect?