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Agreements for Future Relief from Automatic Stay

By Mike C. Buckley
November 21, 2008

The question, “Can we get them to agree not to file bankruptcy in the future?” must be near the top of the list of things clients most commonly ask their transactions and workout lawyers.

Most lawyers fielding this question are likely to explain that such an agreement is not enforceable under bankruptcy law. A debtor, even a sophisticated debtor represented by experienced and knowledgeable counsel, simply cannot give an enforceable promise not to file a future bankruptcy case. Fallick v. Kehr, 369 F.2d 899 (2nd Cir 1966). Good lawyers then suggest that, in certain situations, an agreement for the entry of an order lifting the automatic bankruptcy stay, or an agreement not to oppose a lift-stay motion if the other side files a bankruptcy petition, may be enforceable.

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