671 B.R. 638
Bankr. E.D.N.Y.2025Background
- Tashanna B. Golden (debtor) sought a preliminary injunction in bankruptcy court against several student loan entities to prevent collection on certain discharged student loans for herself and a proposed (putative) class of similarly situated debtors.
- The bankruptcy court issued an injunction against defendants, restraining collection on loans that exceeded the cost of attendance or were for post-graduation living expenses, as described in the amended complaint.
- Defendants (PHEAA, National Collegiate Student Loan Trust, GS2, Firstmark) moved for a stay pending appeal, seeking to pause the injunction until their appeals could be heard by the district court.
- Defendants argued the injunction would cause irreparable harm, that the court misapplied rules of procedure and relevant circuit precedent, that the injunction was overbroad under recent Supreme Court precedent, and that public interest favored a stay.
- The bankruptcy court denied the motion for a stay, finding the defendants had not met the standard required for such extraordinary relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Likelihood of success on appeal | Defendants have not shown likely success; court’s rulings were correct | Strong likelihood of success due to errors in applying Rule 19 & Bruce; CASA bars injunction | No strong showing; defendants unlikely to succeed |
| Irreparable injury absent stay | No irreparable harm; compliance costs are only monetary and remediable | Compliance is costly, time-consuming, and harms non-party loan owners | No irreparable injury shown; harm is monetary |
| Substantial injury to non-moving parties (Golden/class) | Stay would allow unlawful collections on discharged debts, harming class | No harm to class since defendants not collecting/harassing; any harm is monetary | Substantial injury would occur to class if stayed |
| Public interest | Public interest favors enforcement of bankruptcy discharge/fresh start | Stay favors public interest by clarifying law and avoiding borrower confusion | Public interest supports enforcing injunction |
Key Cases Cited
- Nken v. Holder, 556 U.S. 418 (standard for stay pending appeal: likelihood of success, irreparable harm, balance of harms, public interest)
- Sampson v. Murray, 415 U.S. 61 (monetary harm does not constitute irreparable injury for injunctive relief)
- Citigroup Glob. Mkts., Inc. v. VCG Special Opportunities Master Fund Ltd., 598 F.3d 30 (Second Circuit recognizes overlap between stay and injunction standards)
- Bruce v. Citigroup Inc., 75 F.4th 297 (limits bankruptcy courts’ contempt power on nonlocal discharges; left open declaratory/injunctive relief)
- SEC v. Citigroup Glob. Mkts., Inc., 673 F.3d 158 (acknowledges Nken factors)