What is a “motion to extend the automatic stay” in a Chapter 11 bankruptcy?

A motion to extend the automatic stay in a Chapter 11 bankruptcy is a motion filed with the court that asks for permission for the debtor to continue to benefit from the protections of the automatic stay, which provides temporary relief from creditors’ collection efforts while the debtor is attempting to reorganize its debts. In Washington, the automatic stay will automatically take effect when an individual or company files for Chapter 11 bankruptcy protection. However, after a period of time, the court will end the automatic stay unless the debtor files a motion to extend the automatic stay. A motion to extend the automatic stay allows the debtor to continue to receive the protections of the automatic stay and to have additional time to complete its reorganization process. The motion must explain why the debtor needs the automatic stay to be extended, such as to complete negotiations or settlements with creditors or to work on a reorganization plan. Once the motion to extend the automatic stay is filed, the court may set a hearing to review the motion and the debtor must show that the stay is necessary and beneficial for both the debtor and the creditors. In some cases, the court may deny the request for an extension of the automatic stay, leaving the debtor’s case open to creditors’ collection efforts. For this reason, it is important to file a motion to extend the automatic stay as soon as possible in order to protect the debtor from such efforts.

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What is a “motion to extend the automatic stay” in a Chapter 11 bankruptcy?

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