Automatic Stay In Prosecuting the Bankrupt

Abstract

In dealing with the bankruptcy regime, the legislator requires legal entities tomanage this regime for specific purposes. One of these legal entities that plays asignificant role is “automatic stay”. This legal entity is designed to preventindividual action of creditors. Different factors play a role in the efficiency andinefficiency of the automatic stay. The main reasons for efficiency are increasingthe value of property of the bankrupt and reducing costs. The main cause ofinefficiency is the redistribution of wealth. In Iranian law, a limited scope andthe lack of enforcement of the automatic stay are regarded as main reasons forinefficiency of this legal entity. In the United States, the scope of automatic stayis wider than Iranian law, and this legal entity can be enforced in the former.Theautomatic stay is unavoidable in Iranian law, whereas there are different viewsin U.S. law in this regard.

Keywords

• bankruptcy
• automatic stay
• adequate protection theory
• trustee
• creditors’ bargain theory