Literature Review: Violation of Stay Period in Business Law (BTX3900)

This literature review examines the critical aspects of stay period violations in business law, specifically within the context of personal insolvency. The report begins by defining the stay period according to current laws and then explores the types of violations recognized by the courts, differentiating between automatic stay and discharge violations. It analyzes instances where courts have determined violations and those that do not constitute violations, considering the actions of creditors during these periods. The review also highlights recommendations for potential changes in the law to better protect both debtors and creditors. The conclusion emphasizes the importance of the automatic stay in providing debtors with a respite from creditors while also safeguarding creditor interests. The report provides a comprehensive overview of the legal framework and its practical implications, aiming to inform and guide further study in the field of business law.

Running head: LITERATURE REVIEW 0
BUSINESS LAW ASSIGNMENT

LITERATURE REVIEW 1
Introduction
In the case where the creditors deliberately violate the automatic stay, then they may look for
punitive damage, actual damage, fees of attorney and relevant cost. Further, the
wilful violation takes place while the creditors have specific grounds to get the knowledge of
the bankruptcy filing and contacting anyhow. This literature review states the issues that what
happens while there is the violation during the stay period by creditors in the case of Personal
Insolvency. In the following parts, meaning of stay period as per current laws, and the types
of violation of a stay period treated by the courts is discussed and critically examined. This
report also states that what courts have found violates or does not violate stay. In this report,
recommendations for necessary changes are also made.
Literature Review
Stay period as per current law
The stay of proceeding refers to the ruling by courts in criminal proceeding and civil
proceeding, halting more legal procedures in the legal proceeding or hearing. The courts may
consequently lift the stay. Moreover, the court may continue legal proceeding on the basis of
event occurring when the stay is decided. In relation to the declaration of intention presented
by the debtors, the stay period refers to the period starting on a day on that the declarations
were taken as per the section 54C and concluding while:
1. a period of twenty one days starting on a day finishes;
2. The appeal of creditor or the appeal of debtor is represented in against of the debtor;
3. As per the section 188, debtors sign an authority, or
4. The confiscation orders are created in against of the debtors;

LITERATURE REVIEW 2
The particular manners of insolvency law protects numerous the people in the case of
violation of stay period Interrelations between the stay period and relevant procedures or
laws faults and the particular failure of the bankruptcy law in giving the protection to the
creditor and debtor in the violation’s case throughout the period of stay1.
Types of violation of the stay period that are considered by court
There are two types of violation of stay period considered by the court. These are automatic
stay and discharge violation. These two types of stay are explained as below-
Automatic stay and discharge violations
The Bankruptcy Code covers the properly detailed lists of the activities that are not excluded
by an automatic stay, this does not state the consequences of weakening an abide by the
orders, except in one respect. As per the section 362(h) of Bankruptcy Code, the person
injured by the intractable violation of the stay is permitted to have the real damages,
involving the fee of attorneys, and in the proper situations, can get punitive damages. While
the creditors violating an automatic stay is the administrative entities, normally, the
corporation should return seized properties or money, however cannot significantly be
required to make the payment of damages or fee of the attorneys. Bankruptcy court has
indirect authority to take the entry of order of disapproval in against of the creditors who is in
the violation of an automatic stay or can give damages for the wilful violation. These
damages involve real damages that may involve the fee of attorney and mental stress, along
with the corrective damages2.
In the addition of this, The Bankruptcy Code has determined various debts to not be
dischargeable in the bankruptcy. These debts involve, however are not restricted to, local
support responsibilities like allowance and support to child, some central tax and state tax,
1 James Baxter, Voting rules in bankruptcy law (Springer, 2016).
2 Andrew Gibson, The automatic stay (Pearson Australia, 2015).

LITERATURE REVIEW 3
penalties to the administrative organisations, and examples or cases in which the debts were
attained by the frauds3.
When do courts find stay has been violated?
Upon the filing of voluntary or involuntary bankruptcy petition, the automatic statutory
injunction is activated to stop any company from commencing or continuing acts against the
debtors or properties of bankruptcy estate of debtor for the objective of gathering on the debts
that arose before the date of bankruptcy appeal. Any corporation looking for relief from or
alteration or end of the stay can appeal the bankruptcy court for the objective. The bankruptcy
court would award the request if it searches the causes to do accordingly. Causes are
normally searched where the debtors may not properly secure the interest of creditors in
properties, or where the debtors lack equity in assets4.
Actions of creditors during stay period
The discharge injunction forbids the act of collection in against of discharged defaulter
(debtor). For example, in case where the credit card debts are involved in the discharge, then
the creditors are not allowed to attempt the collection on the debts5. The debts still exit,
however the creditors may not sue or may not take legal action for the collection. There are
some options available to the creditors for the collection on the discharged debt. Mostly, the
debtor would be accountable for the complete due debts. The creditors may not take legal
action for the payments; however, this may sue the co-debtor. The co-debtors are also
precluded from taking legal actions for the payment6.
3 William Greaves, vulnerability of older Australians in bankruptcy (Oxford university press, 2015)
4 Christopher Symes, Statutory priorities in corporate insolvency law: an analysis of preferred creditor status
(Routledge, 2016).
5 Peter Grimshaw, Insolvency law protects parties (Oxford university press, 2017)
6 Michael Bryan, Vann Vicki and Thomas Susan Barkehall. Equity and trusts in Australia (Cambridge
University Press, 2017).

LITERATURE REVIEW 4
Recommendation for changes
As per the above discussion, it is recommended that during the stay period, protection should
be given to the debtors. It is also required that the bankruptcy law should give similar rights
to the debtors as well as creditors. There should be equal provisions of the punishment for
the debtors and creditors.
Conclusion
As per the above analysis, it can be concluded that by ending the efforts related to the
collection, all nuisance, and the foreclosure acts, the automatic stay renders the debtor a
breathing room from the creditor. However, an automatic stay also gives the security to the
creditor. In the absence of this, some violent creditors will be capable to follow the personal
remedy in against of the properties of debtor, probably harming the creditor’s interest. The
bankruptcy attorney can assist in the negotiation of certain exceptions to a stay. On the other
hand, the bankruptcy attorney may assist the debtor to make force the rights in the automatic
stay.

LITERATURE REVIEW 5
Bibliography
A. Articles/ Books/ Reports
Andrews, Neil, The violation of stay period (Cambridge University Press, 2016)
Baxter, James, Voting rules in bankruptcy law (Springer, 2016).
Bryan, Michael, Insolvency law reports (Cambridge University Press, 2016).
Bryan, Michael, Vicki Vann, and Susan Barkehall Thomas. Equity and trusts in Australia
(Cambridge University Press, 2017).
Gibson, Andrew, The automatic stay (Pearson Australia, 2015).
Greaves, William, vulnerability of older Australians in bankruptcy (Oxford university
press, 2015)
Grimshaw, Peter, Insolvency law protects parties (Oxford university press, 2017)
Symes, Christopher, Statutory priorities in corporate insolvency law: an analysis of
preferred creditor status (Routledge, 2016).