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BankruptcyThe Bankruptcy StrategistFeatures

DJK Enterprises: Prepetition Waiver of Automatic Stay In Previously Negotiated Forbearance Is Unenforceable

By Lawrence J. Kotler and Drew S. McGehrin
May 31, 2025

A recent bankruptcy court decision has added its perspective to an increasingly divergent line of case law scrutinizing the enforceability of a debtor’s prepetition waiver of the automatic stay afforded to it by Section 362(a) of the Bankruptcy Code. In the case of In re DJK Enterprises, (Case No. 24-61026), the U.S. Bankruptcy Court for the Southern District of Illinois held that a debtor’s prepetition waiver of the automatic stay contained in a previously negotiated forbearance agreement was per se unenforceable.

Facts and Procedural History


In this case, the debtor, DJK Enterprises LLC, was the owner and operator of a full-service hotel and convention center. Those properties were encumbered by a $10.5 million mortgage securing a note in favor of St. Louis Bank who, in turn, assigned its claim to Effingham Asset Funding.

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