Most creditor actions are barred by the automatic stay once a bankruptcy case is filed. However, there is a limited set of situations in which creditors or (more commonly) the government can continue to pursue actions outside of the bankruptcy case. Further, actions by the debtor against others are not stayed.
Even if litigation or other proceedings are not automatically stayed, they may still pose a significant distraction to the debtor. For example, a Chapter 11 debtor recently sought and obtained a stay of its own patent lawsuit (announced here by its adversary in litigation).
If you are considering requesting Chapter 11 bankruptcy protection, you should consult with an attorney familiar with Chapter 11 bankruptcies to discuss your options. For a free consultation, call (480) 719-1152.