Issue link: https://mbozikis.ufcontent.com/i/1422521
109 authorized by the Bankruptcy Code, and many courts permitted Section 105(a) to be used in this fashion. More recently, however, courts have begun to restrict the use of Section 105(a) by requiring that the requested relief have a more solid basis in the Bankruptcy Code. One prime example of the use of Section 105(a) is as a basis for a stay or injunction where the automatic stay may not be applicable. Injunctions and stays issued under Section 105 of the Bankruptcy Code are governed by the standard rules and procedures applying to injunctions generally. These require the court to consider some or all of the following: (i) whether the movant has demonstrated a probability of success on the merits; (ii) whether there is a clear showing of the threat of irreparable harm to the movant in the absence of the injunction; (iii) whether the injunction would result in substantial harm to others; and (iv) whether the injunction is in the public interest. See, e.g., W.R. Grace & Co. v. Libby Claimants (In re W.R. Grace & Co.), No. 08-246, 2008 U.S. Dist. LEXIS 86958 *7 (D. Del. Oct. 28, 2008) (citing Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). Another example of relief commonly sought under Section 105(a) is for payments made to creditors on account of prepetition claims, including where such claims would be entitled to a level of priority (e.g., accrued but unpaid prepetition wages) as well as so-called "critical vendor" payments. Whereas the payment of the former category of claims generally continues to be authorized, payment of the latter category is subject to more scrutiny. Courts generally require that the following three conditions are met before issuing a critical vendor order. First, non-critical vendors and other unsecured creditors are not made worse off because of the payment. Second, alleged critical vendors will cease deliveries if old debts go unpaid. Third, there are no alternatives to appease critical vendors in order to receive future deliveries. See In re Kmart Corp., 359 F.3d 866, 873 (7th Cir. 2004).