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2021 Stroock Bankruptcy Guide

Issue link: https://mbozikis.ufcontent.com/i/1422521

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108 5. Utility Service Section 366 of the Bankruptcy Code requires a utility to continue to provide service to the debtor for at least a short period of time after a bankruptcy case has commenced. Upon the twentieth day following the commencement of a case, other than one filed under Chapter 11, however, a utility provider can alter, refuse, or discontinue service if it is not furnished with "adequate assurance" of payment in the form of a deposit or other security. 11 U.S.C. § 366(b). In addition, Section 366(c) governs utility providers in cases filed under Chapter 11 of the Bankruptcy Code. Such utility providers may alter, refuse, or discontinue service if they do not receive "adequate assurance" that is satisfactory to them during the thirty-day period beginning on the petition date. Under Section 366(c)(1)(A), "adequate assurance" is defined as a cash deposit, a letter of credit, a certificate of deposit, a surety bond, a prepayment of utility consumption, or another form of security that is mutually agreed upon between the utility and the debtor or the trustee. Additionally, a utility may set off against or recover a debtor's prepetition security deposit without violating the automatic stay. 11 U.S.C. § 366(c)(4). On request of a party and after notice and a hearing, the court may modify the amount of adequate assurance demanded by the utility. 11 U.S.C. § 366(b)–(c)(3)(A). In determining whether an assurance of payment is adequate in a case filed under Chapter 11, a court may not consider: (i) the absence of security before the petition date; (ii) the payment by the debtor for utility service in a timely manner before the petition date; or (iii) the availability of an administrative expense priority. 11 U.S.C. § 366(c)(3)(B). 6. Power of the Court According to the Bankruptcy Code, the court may issue any "order, process, or judgment necessary or appropriate" to carry out other provisions of the Bankruptcy Code. 11 U.S.C. § 105(a). Historically, practitioners have sought to use Section 105(a) as a basis for approval of requests for relief that may not be squarely

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