561 B.R. 441
Bankr. N.D. Ill.2016Background
- CEOC and its CEOC subsidiary debtors seek a 105(a) preliminary injunction to halt four guaranty actions against non-debtor CEC.
- The injunction would pause actions seeking to enforce CEC guarantees of CEOC notes, to protect CEOC’s restructuring prospects.
- CEOC’s restructuring contemplates a substantial contribution from CEC under RSAs, with broad releases in a planned reorganization.
- CEOC’s-led plan structure aims to use examiner’s report and market testing to negotiate a consensual resolution.
- The court previously denied the motion in 2015 for lack of power but on remand found potential to grant relief under the updated factual record.
- Judgments against CEC threaten CEOC’s ability to fund a plan and thus threaten the bankruptcy process itself.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is a 105(a) injunction appropriate to aid reorganization? | CEOC argues injunction will preserve assets for CEOC’s plan. | CEOC contends injunction is needed to prevent depletion of resources by guaranty actions. | Yes; injunction likely enhances reorganization prospects. |
| Does public interest favor the injunction? | Injunction promotes settlement and orderly resolution. | Public interest in enforcing guaranties argues against delaying rights. | Yes; public interest favors settlement and a successful reorganizat ion. |
| Do equities favor granting the injunction against BOKF/UMB actions? | Delay aids settlement; prevents crippling judgments. | Guaranty creditors suffer delay but not irreparable harm. | Equities favor granting the injunction for a limited period. |
| Should the Wilmington Savings action be enjoined? | Immediate need for injunction to protect plan negotiations. | No imminent need; action in early stage. | Continued as to Wilmington Savings; no immediate injunction. |
| Is a bond required for the injunction? | Bond not necessary under bankruptcy Rule 7065. | Rule 65(c) typically requires a bond. | No bond required. |
Key Cases Cited
- Fisher v. Apostolou, 155 F.3d 876 (7th Cir. 1998) (injunctions under 105(a) require likelihood of success and public interest)
- Teknek, 563 F.3d 639 (7th Cir. 2009) (injunctions under 105(a) limited to exceptional circumstances)
- In re Lyondell Chem. Co., 402 B.R. 571 (Bankr. S.D.N.Y. 2009) (equitable power to issue injunctions to carry out bankruptcy objectives)
- In re Excel Innovations, 502 F.3d 1086 (9th Cir. 2007) (likelihood of successful reorganization as standard for 105(a) injunctions)
- In re United Health Care Org., 210 B.R. 228 (S.D.N.Y. 1997) (recognizes 105(a) injunction as instrument to facilitate reorganization)
- Regency Realty Assocs. v. Howard Fertilizer, Inc., 179 B.R. 717 (Bankr. M.D. Fla. 1995) (early articulation of 105(a) injunction framework)