The automatic stay under the Bankruptcy Code can affect actions involving a bankrupt insured, claimant, or other party. Determining whether a particular claims-related action is stayed—and whether relief from the stay may be necessary—can be critical.

Perry, PLLC advises insurers and claims professionals regarding:

• Application of the automatic stay to insurance claims and related litigation

• Whether an insurance policy may be cancelled or terminated

• Whether claims-handling activities implicate the automatic stay

• Actions against or involving a debtor

• Relief from the automatic stay

• Stay violations and potential consequences

• Coordination between bankruptcy counsel, coverage counsel, and claims professionals

The insurance policies and insurance policy proceeds may be property of a debtor’s bankruptcy estate and subject to the automatic stay. Because the stay may apply, it is important to consider whether an insurer is authorized to pay insurance proceeds without obtaining bankruptcy court approval. All matters may have different outcomes, but insurers should be sure to confirm whether the automatic stay is in effect before agreeing to pay insurance proceeds.