This section applies to a company in administration. No resolution may be passed for the winding up of the company. No order may be made for the winding up of the company. This is a formal moratorium on insolvency proceedings.

The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. As with cases under other chapters of the Bankruptcy Code, a stay of creditor actions against the chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. During this time, creditors are generally prohibited from taking action to collect or recover claims from the debtor or the debtor’s property outside the bankruptcy process.

Section 362(a) of the Bankruptcy Code provides that the filing of a petition "operates as a stay" of, among other things, "the commencement or continuation… of a judicial, administrative, or other action or proceeding against the debtor" and "any act to collect, assess, or recover a claim against the debtor" that arose before the filing.[6] The legislative history explains that the stay "simply stays its enforcement pending an orderly examination of the debtor's and creditors' rights," underscoring that collection and enforcement are paused to allow administration of the estate.[6] Subsection (c) governs the automatic termination of the stay, indicating that these restraints remain in place until the case is closed, dismissed, or a discharge is granted or denied.[6]

Individual creditors and retention of title claimants alike are significantly impacted by the moratorium on enforcement of claims and other legal processes. Any enforcement of security or legal proceedings against the company in administration are suspended. Accordingly, the moratorium under Schedule B1 prevents and suspends creditors and third parties from taking action against an insolvent company in administration during a set period of time.

A new moratorium to give companies that are distressed but financially viable a period of time in which creditors cannot take action against them, allowing them to commence restructuring or procure investment. The UK government previously expressed support for an initial period of 28 days with scope for extension where there remains a good prospect of achieving a better outcome for creditors than would otherwise be possible.

The stay of actions or of enforcement proceedings is necessary to provide a "breathing space" until appropriate measures are taken for reorganization or liquidation of the debtor's estate. During the stay, the debtor may not make any payments to discharge prior claims (except salaries) or dispose of any assets other than in the regular course of business. One of the principal purposes of an insolvency law is to provide for the imposition of a "stay" on the ability of creditors to enforce their rights through legal remedies during the period of the liquidation proceedings.

Under 11 U.S.C. § 362(a)(2) the automatic stay prohibits "the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case."[7] Section 362(a)(3)–(4) further stays "any act to obtain possession of property of the estate" or "to exercise control over property of the estate" and "any act to create, perfect, or enforce any lien against property of the estate."[7] The article summarizes: "The automatic stay is an order that goes into effect automatically and stays, which is an archaic term meaning temporarily stops, all collection activity against the debtor or property of the debtor," and "if the bankrupt debtor owes you or your client money, the automatic stay stops you from collecting it."[7]

A seminar outline on the automatic stay notes that "Any action to obtain, assess, or recover a claim against the debtor that arose before the filing of the bankruptcy petition is stayed. 11 U.S.C. § 362(a)(6)."[4] It explains that the automatic stay "prevents creditors from dissecting the bankruptcy estate before the bankruptcy trustee can distribute the assets equally," making clear that creditor enforcement and collection are halted so that distribution from the estate can occur in an orderly fashion.[4] The outline also states that judgments obtained prepetition cannot be implemented and that foreclosure actions commenced before filing are stayed.[4]

The moratorium will become effective upon filing ... During this period, trade creditors and lenders will be prevented from initiating insolvency or other legal proceedings, and landlords will be unable to forfeit leases.

Immediately upon the filing of a bankruptcy petition, a moratorium or "automatic stay" stays all litigation and prevents the enforcement of judgements and of security without leave of the court. This includes staying the continuation of any existing actions that were commenced before the filing. Any act done in contravention of the stay is retroactively made void or voidable by the court.

The Justia Bankruptcy Law Basics guide for Chapter 9 states: "The stay operates to stop all collection actions against the debtor and its property upon the filing of the petition."[2] It further notes special provisions in 11 U.S.C. § 922, but emphasizes that pledged special revenues may still be applied to payment of indebtedness or distributed to bondholders without violating the automatic stay, reflecting that while most value transfers are halted, certain statutory exceptions permit continued distribution of specific collateral.[2]

The automatic stay then operates to protect this property by prohibiting anyone from making a claim against the property in the estate. Put simply, once a debtor properly files for bankruptcy in a U.S. court, no creditor may initiate or continue a suit seeking to acquire any of the debtor’s assets. … In effect, the automatic stay seals the debtor’s estate such that all of the debtor’s assets are protected from creditors for the duration of the stay. … Primarily, the automatic stay serves to “prevent the debtor’s estate from being picked to pieces by creditors” so that the bankruptcy court can distribute the estate in an orderly fashion.

The statutory moratorium in administration … prevents the enforcement of security or continuation of legal process against the company or its property without the administrator’s consent or court’s permission. Likewise, the enforcement actions of individual unsecured creditors are impermissible, and those creditors may only enforce their claims within the framework of the insolvency proceedings. An insolvency declaration automatically entails the stay of pre-existing enforcement proceedings addressed against the insolvency estate.

A practitioner overview explains that the automatic stay "is a statutory injunction arising immediately upon the filing of a bankruptcy case" and "applies to acts against a debtor and its property."[3] It states that "Pending lawsuits and other judicial proceedings are stayed and cannot be continued nor commenced" based on prepetition claims, and that "Judgments against a debtor or its property generally cannot be enforced."[3] The article adds that judicial and self-help actions to obtain possession or exercise control over property, as well as acts to collect or recover pre‑bankruptcy claims or to set off debts, are stayed—illustrating the broad halt on procedural enforcement and collection activities.[3]

Creditors cannot commence or continue legal proceedings, levy distress, or enforce security without court permission or monitor consent during a Part A1 moratorium under the Insolvency Act 1986. The moratorium is designed to give companies breathing space from certain creditor action while a rescue or restructuring is explored. It restricts the ability of creditors to take enforcement steps against the debtor's estate during the period of the moratorium.

The moratorium provides 20 business days’ protection from certain creditor action. The moratorium is broadly similar to the administration moratorium, and includes restrictions (among others) on insolvency proceedings, enforcement of security, and forfeiture. If within 12 weeks of the end of the moratorium a company enters into administration or liquidation, unpaid moratorium debts and priority pre-moratorium debts are given a priority ranking in the insolvency distribution waterfall.

A moratorium in insolvency refers to the temporary suspension of legal actions against a company, providing breathing space for the company to explore its restructuring or rescue options. It prevents creditors from taking further legal action, allowing the company to focus on addressing its financial issues without the pressure of immediate legal proceedings.

The Virginia State Bar notes that "The automatic stay is essential to the bankruptcy process because it relieves a debtor from pressure and harassment from their creditors" and functions to stop collection actions.[9] It underscores that creditors must "comply with the automatic stay" and that actions taken in violation of the stay can have consequences, reinforcing that both legal proceedings and collection or enforcement efforts against the estate’s property are halted once the stay is in effect.[9]

Section 362 of the Bankruptcy Code contains Title 11’s important provisions regarding the automatic stay, which is the mechanism that stops, bars, or “stays” the collection activities of a bankruptcy debtor’s creditors. … The automatic stay stops lawsuits…; the automatic stay prevents the enforcement of judgments…; the automatic stay stops repossession and garnishment…; any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; … any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case…; the setoff of any debt owing to the debtor that arose before the commencement of the case…

An administrator has the benefit of a wide moratorium that prevents enforcement action being taken against the company and its property not only by unsecured creditors but also by secured creditors unless the consent of the administrators or the court is obtained. A compulsory liquidator has the benefit of a moratorium that prevents enforcement action being taken against the company and its property by unsecured creditors. The second new procedure introduced by the Corporate Insolvency and Governance Act 2020 is the moratorium procedure, enabling a company to avail itself of a moratorium similar in scope to an administration moratorium including preventing secured creditor enforcement and forfeiture.

A family‑law focused analysis explains that the automatic stay "stops all collection efforts, all harassment, and all foreclosure actions" to "give the debtor a breathing spell from his creditors."[8] It details that the stay "bars commencement or continuation of a legal proceeding against the debtor" involving property of the estate and "bars any action to establish, enforce, or collect a pre‑bankruptcy debt" in the divorce/separation context, except for specified domestic support exceptions.[8] The discussion shows that, in general, both the procedural enforcement of claims and the collection of value from the debtor’s property are halted, subject to defined carve‑outs.[8]

When the petition is filed, an automatic stay comes into effect that prevents any enforcement action or the start or continuation of other legal proceedings against the debtor or the debtor’s property, without the permission of the bankruptcy court. The stay is intended to preserve the estate and prevent a race to the courthouse by individual creditors seeking to enforce their claims. Creditors must instead participate in the collective bankruptcy process to receive distributions from the debtor’s estate.

The automatic stay is a federal court injunction that stops virtually all collection actions against you the instant your bankruptcy case is filed. … Under 11 U.S.C. § 362(a), the automatic stay halts a broad range of creditor actions, including: lawsuits and judgments…; wage garnishments…; foreclosure proceedings…; repossession…; collection calls and letters…. In a typical first-time bankruptcy filing, the automatic stay remains in effect throughout the duration of your case until the case is closed, dismissed, or the debtor receives a discharge.

A law firm explanation of remedies for stay violations states: "As soon as a bankruptcy petition is filed, Section 362 of the Bankruptcy Code imposes an automatic injunction — known as the 'automatic stay' — that immediately halts most collection efforts, lawsuits, garnishments, repossessions, foreclosures, and creditor harassment."[1] It further notes that "wage garnishments must cease, foreclosures are paused, utility disconnections are stopped, and lawsuits related to debt collection cannot proceed without express permission from the bankruptcy court," illustrating how both enforcement actions and actual collection from the debtor’s income or assets are suspended.[1]

Nelson Mullins notes that "The filing of a bankruptcy petition under any chapter of the Bankruptcy Code creates the ‘automatic stay,’ which prevents creditors from taking any further action against either the debtor or the debtor’s assets during the bankruptcy."[5] This formulation shows that both procedural actions (e.g., lawsuits, enforcement) and actions affecting the debtor’s assets (collection, seizure, distribution outside the bankruptcy process) are generally halted during the case.[5]

The suspension of various legal processes and execution against the company, similar to the moratorium accompanying administration. The key features of a Moratorium are: the suspension of various legal processes and execution against the company. Payment holidays affect the priority of those debts during the moratorium and in subsequent insolvency proceedings.

Italy made resolving insolvency easier through an amendment to its bankruptcy code that introduces a stay period for enforcement actions while the debtor negotiates with creditors. During this stay period, individual enforcement proceedings by creditors are suspended, and the debtor is protected from collection actions. The reform was aimed at facilitating reorganizations by providing temporary relief from enforcement.

Once the moratorium is declared then no creditor or any other person can file a case against the company. ... any proceedings instituted prior to the declaration of moratorium cannot continue; they are all stalled. ... creditors are prevented from appropriating any monies from the corporate debtor.

Suspension of payments is a temporary moratorium granted by the court to a debtor who foresees being unable to continue paying. It provides breathing space to restructure and continue as a going concern. Governed by the Bankruptcy Act, it suspends enforcement by ordinary creditors.

In many insolvency regimes, once proceedings are opened, any actions taken by the debtor that are detrimental to the estate are normally void, and the liquidator may freeze or "seal" the estate’s assets. Creditors are generally stayed from attaching, selling, or taking possession of assets as a means of enforcing their claims, and must await distribution according to the statutory priority rules. The stay thus affects both procedural enforcement actions and the ability to collect value directly from the debtor’s estate outside the insolvency process.