The Automatic Stay

Now that we have a bankruptcy underway in addition to all the civil suits, I should probably take a moment and try to explain in laymans' terms one very important aspect of how the bankruptcy will affect things from here on out: The automatic stay.

As this Wikipedia entry explains, the "...automatic stay is an automatic injunction which halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy." As the entry indicates, it zaps into existence at the very moment the bankruptcy is first filed (which in this case was Tuesday, October 6).

Notice that the debt collection actions prohibited include "...beginning or continuing judicial proceedings against the debtor..." So, what this means is, the various civil lawsuits must come to a grinding halt. The plaintiffs (who are "creditors") cannot continue pursuing their lawsuits. This means they can't file any new motions against the now bankrupt Chisholm Properties Circuit Events, LLC (CPCE); the lawsuit versus them is basically on hold for the duration of the bankruptcy.

Notice however that there are other defendants in the civil suits who have NOT filed for bankruptcy...Johnny Chisholm personally, for example. The lawsuits should be able to proceed against the non-bankrupt parties as normal; to do this, the lawsuits will likely be split, with the now bankrupt CPCE being segregated in a seperate lawsuit (that will be put on hold as per the automatic stay). This procedure is known as "disaggregation," and I'm guessing we'll see that happen in these civil suits soon...