Schafer and Weiner, PLLC Extend Automatic Stay to Non-Debtor Owner

June, 2018

Schafer and Weiner represents a single-location restaurant in its chapter 11 restructuring.  A merchant cash advance creditor brought an out-of-state lawsuit against the restaurant’s responsible person, who is its day-to-day manager and majority owner, asserting that he is personally liable for the business’s obligations. The automatic stay is a primary benefit in a bankruptcy case and protects the debtor from collection litigation.  However, extending the debtor’s automatic stay to its non-debtor principals is extraordinary relief.  John Stockdale, Jr. and Jeffery Sattler successfully petitioned the bankruptcy court, which stayed the state court litigation against the non-debtor owner to give the restaurant sufficient time to propose its plan of reorganization.