A bankruptcy court’s jurisdiction over the assets and liabilities of a bankruptcy estate is extremely broad and carries with it the strong arm of the U.S. Bankruptcy Code and underlying bankruptcy policy. Given the sharp rise in bankruptcy cases in recent times, it can be expected that the proceedings in one bankruptcy court may clash with those occurring in another. The impact of one bankruptcy case on another may most clearly be seen when the automatic bankruptcy stay in one case may prevent the debtor-in-possession or trustee in another case from carrying out the fiduciary duties owing to the bankruptcy estate.
The automatic bankruptcy stay is among the most important protections afforded to a debtor. The bankruptcy stay arises the moment a bankruptcy petition is filed and is an automatic injunction that halts actions by creditors, with certain exceptions, to enforce obligations against the bankrupt debtor. The automatic stay may be lifted upon motion of a party under a variety of circumstances, both expressly set forth by statute or for other “cause.” 11 U.S.C. 362(d).
