Work in the Time of COVID-19: FAQs for Employers

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Rule 4001(a)(3) of the Bankruptcy Rules requires that an order granting a motion for relief from the automatic stay is stayed until the expiration of fourteen (14) days after the entry of the order, unless the court orders otherwise. Many creditors who file motions for relief from stay in the Eastern District of North Carolina regularly include “Rule 4001 Waiver” language in their proposed stay relief orders so that the orders can become effective upon entry without a delay. Judges in the Eastern District of North Carolina traditionally allowed this language as a matter of course.

Recently, however, the Eastern District judges have been less willing to “rubber stamp” Rule 4001 Waiver language in proposed orders. Specifically, Judge Humrickhouse has noted from the bench that she will no longer automatically allow the language to be included in stay relief orders. She has indicated that if the creditor requests a waiver, the creditor should be prepared to explain to the court why the waiver is necessary. This explanation may be required even in situations where the motion for relief from stay is unopposed by the debtor(s). The court may set an otherwise unopposed motion for hearing if it is unclear why the creditor has made a request for the waiver.

In most situations, the waiver language (or lack thereof) in stay relief orders may have little impact on creditors. Many creditors have internal procedures that must be completed prior to the creditor taking steps to proceed under a stay relief order. Those procedures often take more than the 14 day stay period. However, if the collateral is an uninsured vehicle, if storage fees are accruing, or if other exigent circumstances exist, the creditor may require the benefit of being able to proceed immediately upon entry of the order. In those situations, the creditor should request a waiver of Rule 4001(a)(3) make clear in its motion why the waiver of Rule 4001(a)(3) is necessary. Failure to include an explanation of the basis for the waiver may cost the creditor valuable time.

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