Order for Relief

An order for relief invokes the automatic stay and brings down an iron curtain, separating the pre-bankruptcy from the post-bankruptcy debtor, creating a bankruptcy estate and prohibiting unauthorized transfers of the debtor’s property.

The filing of a voluntary bankruptcy petition automatically produces an order for relief. In an involuntary case an order for relief needs to be actually entered by the bankruptcy court. An order for relief will be entered if the debtor does not contest the involuntary petition or, if the debtor contests the involuntary petition, an order for relief will be entered if (1) the court determines that the debtor is not paying its undisputed debts as they come due, or (2) a custodian (other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of the debtor for the purpose of enforcing a lien against such property) was appointed or took possession within 120 days before the petition was filed.

Bankruptcy Code §§ 301(b), 303(h). See also Automatic Stay, Bankruptcy Petition, Involuntary Case, Postpetition Transfer.

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