Proposed Order Granting Relief from Automatic Stay to Effectuate Setoff

This legal template refers to a proposed court order seeking relief from an automatic stay in order to carry out a setoff. An automatic stay is a legal provision that is typically invoked during bankruptcy proceedings to halt any creditor actions against a debtor's assets or interests, providing a period of respite to allow for the reorganization or resolution of the debtor's financial affairs.

However, in certain instances, a creditor may seek relief from this automatic stay to execute a setoff. A setoff refers to the deduction or cancellation of debts owed by a debtor to a creditor against an obligation owed by the same creditor to the debtor. In other words, this template outlines a proposed order that allows a creditor to use funds owed to them by the debtor to offset or reconcile the debtor's indebtedness to the creditor.

The purpose of this template is to provide a legal framework and language for a party seeking to obtain court approval for effectuating a setoff during a bankruptcy or insolvency proceeding. It would typically be used by the creditor's legal representative to draft and present the proposed order to the court, detailing the specific reasons and justifications for why relief from the automatic stay is necessary to execute the setoff.

The template may include sections addressing the background and procedural history of the case, an explanation of the creditor's intent to setoff, legal arguments supporting the relief request, and any additional supporting documentation or exhibits. Ultimately, the goal of this template is to facilitate the preparation and submission of a comprehensive and compelling proposal to the court endorsing the creditor's request to lift the automatic stay in order to effectuate the desired setoff.