As previously posted, Bankruptcy courts have maintained that waiving or contracting away the right to file for relief under the Bankruptcy Code is contrary to public policy. Emerging caselaw is challenging that position as secured lenders are getting creative and aggressive protecting their loans.
[T]here is a general premise in bankruptcy law that waiving or contracting away the right to file for relief under the Bankruptcy Code is contrary to public policy. Thus, contractual waivers of such rights are generally deemed invalid. Nevertheless, as the case law has developed over the years, a number of courts have held that operating agreement provisions that set limits on the authority of members or managers of a limited liability company to file a bankruptcy case are enforceable.
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