Procedural requirements for stay relief motions, cash-collateral use, post-petition financing, and adequate-protection stipulations.
A motion for relief from an automatic stay provided by the Code or a motion to prohibit or condition the use, sale, or lease of property pursuant to Section 363(e) shall be made in accordance with Rule 9014 and shall be served on any committee elected pursuant to Section 705 or appointed pursuant to Section 1102 of the Code or its authorized agent, or, if the case is a chapter 9 municipality case or a chapter 11 reorganization case and no committee of unsecured creditors has been appointed pursuant to Section 1102, on the creditors included on the list filed pursuant to Rule 1007(d), and on such other entities as the court may direct. Fed. R. Bankr. P. 4001(a)(1).
Federal Rule of Bankruptcy Procedure 4001 consolidates the procedural framework for four substantively distinct categories of motion that share a common feature: each affects the rights of secured creditors, the use of encumbered estate property, or the priority of post-petition financing. The four categories are:
Each subdivision specifies the parties on whom the motion must be served, the contents of the motion, and where applicable the bifurcated interim-and-final hearing structure that allows a debtor to obtain emergency relief at the outset of a case without prejudging the rights of parties who have not yet had time to respond.
A motion for relief from the automatic stay is the procedural vehicle by which a secured creditor, lessor, or other party in interest seeks an order permitting the movant to enforce remedies against estate property notwithstanding the operation of Section 362(a). The substantive grounds are set out in Section 362(d): cause (including lack of adequate protection), absence of equity in the property coupled with absence of necessity to an effective reorganization, and bad-faith filing in certain single-asset real-estate cases.
Rule 4001(a)(3) imposes a 14-day stay of the order granting stay relief unless the court orders otherwise. The 14-day stay gives the debtor an opportunity to seek a stay pending appeal, refinance, or otherwise respond before the secured creditor proceeds with foreclosure, repossession, or eviction.
Under Section 362(e), the automatic stay terminates automatically thirty days after a request for stay relief is made unless the court, after notice and a hearing, orders the stay continued in effect. This default-termination provision creates the procedural pressure for prompt hearings on stay-relief motions and is one of the operational reasons that stay-relief motions are routinely calendared on expedited tracks in many districts.
"Cash collateral" is defined in Section 363(a) as cash, negotiable instruments, securities, deposit accounts, and other cash equivalents in which the estate and an entity other than the estate have an interest. A debtor in possession or trustee may not use cash collateral without either the consent of each entity with an interest or court authorization after notice and a hearing.
Rule 4001(b)(1) sets out the contents of a motion for authorization to use cash collateral. The motion must describe the amount of cash collateral sought to be used, the purposes of the use, the duration of the requested authorization, and the material terms of any proposed adequate protection. Rule 4001(b)(2) requires that the motion be accompanied by a proposed budget setting forth projected receipts and disbursements.
Rule 4001(b)(2) authorizes the court to conduct a preliminary hearing on a cash-collateral motion within fourteen days of filing and to enter an interim order authorizing use only to the extent necessary to avoid immediate and irreparable harm to the estate pending a final hearing. The final hearing must be conducted on notice that satisfies the rule's service requirements, including service on the parties identified in Rule 4001(a)(1).
A motion to obtain post-petition credit, including debtor-in-possession financing, is governed by Rule 4001(c). The motion must be accompanied by a copy of the proposed credit agreement and a proposed form of order, and must contain a concise statement of the material provisions of the proposed agreement, including any provision for cross-collateralization, waivers of rights against pre-petition collateral, adequate-protection provisions, deadlines for filing a plan, provisions affecting the validity of pre-petition liens, indemnification of the lender, releases, milestones, and any default or termination provisions.
The disclosure of these material provisions in the motion itself is a substantive procedural protection: it requires the debtor to surface in the motion the provisions of a financing facility that might otherwise be embedded only in the underlying credit documents.
Rule 4001(d) governs agreements relating to relief from stay, use of cash collateral, providing adequate protection, or obtaining credit. The motion to approve the agreement must include a copy of the agreement, a summary of the agreement's material provisions, and notice to the parties identified in the rule. The court may set a hearing on no less than fourteen days' notice unless an emergency justifies shorter notice.
A mortgage creditor moves for relief from the automatic stay under Section 362(d)(1) for cause based on post-petition payment default. The motion is served on the debtor, debtor's counsel, the Chapter 13 trustee, and parties on the notice list. A hearing is held, the order entering stay relief is subject to the 14-day stay under Rule 4001(a)(3) unless the court orders otherwise, and the secured creditor may thereafter proceed with state-law foreclosure remedies.
On day one of a Chapter 11 case, the debtor in possession files a motion under Rule 4001(b) for use of cash collateral and a motion under Rule 4001(c) for approval of a debtor-in-possession credit facility. An interim hearing is held within fourteen days; an interim order authorizes use and borrowing to the extent of immediate and irreparable harm. A final hearing is held on full notice, and the final order incorporates the negotiated adequate-protection and financing terms.
Rule 4001 is the procedural backbone of the first-day motion practice that defines the opening days of large Chapter 11 cases and of the routine stay-relief practice that occupies a substantial portion of the docket in consumer Chapter 13 cases. The rule's interim-and-final structure for cash-collateral and credit motions reflects a deliberate balance: it allows a debtor to obtain operational liquidity at the outset of a case without prejudging the rights of creditors who require time to evaluate the financing structure.
The disclosure requirements in Rule 4001(c)(1)(B) - the enumerated list of material provisions that must be highlighted in the motion - operate as a procedural antidote to embedded credit-agreement terms that might otherwise pass without focused attention from the court or other parties in interest.
The 14-day stay under Rule 4001(a)(3) is a default, not an entitlement. An order granting relief from the automatic stay is stayed for 14 days unless the court orders otherwise. A movant who needs immediate enforcement should request that the 14-day stay be waived as part of the proposed order, and should be prepared to articulate the cause for waiver.
This page provides general information about Federal Rule of Bankruptcy Procedure 4001. It does not constitute legal advice. Stay relief, cash-collateral, financing, and stipulation practice are governed by district-specific local rules and judge-specific procedures and should be evaluated by qualified counsel.