Gap Period

The period of time between the filing of an involuntary petition against a debtor and the entry of an order for relief against the debtor. Following the filing of an involuntary petition, the court may determine whether the involuntary petition should be dismissed or whether the petition was properly filed, in which case an order for relief will be entered. From the time the petition is filed to the time the order for relief is entered, the debtor is usually authorized to continue conducting business as though no petition were filed against it (but is, which some consider an anomaly, protected by the automatic stay during the period). Claims that arise but not paid during that period are allowed claims (unless otherwise subject to disallowance under the Code), are treated as if they arose just prior to the filing of the petition, and are accorded a position of priority under Section 507(a)(3) of the Code, behind domestic support obligations and administrative expense claims.

Bankruptcy Code ยงยง 303, 502(f), 507(a)(3). See also Involuntary Bankruptcy Case, Involuntary Bankruptcy Petition.

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