Opinion
No. 78-587EG
November 13, 1978
Arrangements — Bankruptcy Rules — Automatic Stay — Relief from the Stay — Continuation of Stays
A debtor is entitled to a continuation of the automatic stay of actions imposed by Bankruptcy Rule 11-44 since the moving secured creditor's collateral is not presently in jeopardy. A creditor had advanced money to the debtor secured by a mortgage on a tract of undeveloped property. Provision was included in the agreement for the construction of residential units on the property. Thereafter, the secured creditor caused a judgment to be entered against the debtor because none of the principal advanced had been repaid, no monthly installments of interest had been paid for eight months and development of the property had not commenced. The debtor then filed a voluntary petition in bankruptcy which, on the next day, was transferred to Chapter XI (arrangements) of the Bankruptcy Act. Prior to the inception of the bankruptcy case, a sheriff's sale of the property had been scheduled. However, the sale was cancelled when the sheriff was informed of the bankruptcy proceedings. Upon the filing of the Chapter XI proceeding, all actions against the debtor were stayed. The creditor here has moved for relief from the automatic stay imposed by Bankruptcy Rule 11-44. It is the duty of the debtor who is seeking continuation of the stay to show that he is entitled to such a continuation. Both the debtor's appraiser and the creditor's appraiser valued the property differently. However, both figures were greater than the debt owed the creditor. The debtor has been exerting great efforts to work out an arrangement with its creditors, the secured creditor's collateral is not presently impaired and what is contemplated is an arrangement with the debtor's unsecured creditors and payment of its secured creditor (the moving party here). Under these circumstances, the debtor is entitled to a continuation of the stay. See Bankruptcy Rule 11-44 at ¶ 20,744.