698 F.Supp.3d 659
S.D.N.Y.2023Background
- Debtor Janice Carrington (pro se) appealed the Bankruptcy Court’s order converting her Chapter 11 case to Chapter 7 and moved in the district court for a stay of all bankruptcy proceedings pending appeal.
- Carrington had previously sought a stay in the Bankruptcy Court of an order requiring turnover of Florida property sale proceeds, but did not ask the Bankruptcy Court to stay the Conversion Order or all proceedings.
- The district court adopted a concurrently-issued Report & Recommendation (R&R) recommending affirmance of the Conversion Order and reviewed the stay motion de novo for procedural and substantive sufficiency.
- The court found Carrington had been in bankruptcy for over three years with no confirmed plan and the Bankruptcy Court had questioned any realistic prospect of reorganization.
- The district court concluded Carrington failed to follow Fed. R. Bankr. P. 8007 by not first seeking a stay in the Bankruptcy Court and, on the merits, failed to show likelihood of success, irreparable harm, or that a stay would not harm creditors or the public interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper forum under Bankruptcy Rule 8007 | Carrington moved for a stay in district court without first moving in bankruptcy court; she asserted the stay motion had been filed in Bankruptcy Court | Appellees argued Rule 8007 requires the movant to first seek relief in the Bankruptcy Court unless impracticable; Carrington did not show impracticability | Denied: Carrington failed to seek stay in Bankruptcy Court as required; procedural defect alone warrants denial |
| Likelihood of success on appeal (standard of review) | Carrington implicitly contends conversion was erroneous | Appellees argue conversion order reviewed for abuse of discretion and record supports conversion | Denied: Carrington did not show a likely success; court adopted R&R recommending affirmance |
| Irreparable harm | Carrington asserted risk to her home and severe financial/emotional strain | Appellees and court viewed alleged harms as speculative and not imminent; no realistic prospect of confirming a plan | Denied: No actual, imminent irreparable injury shown |
| Harm to others and public interest | Carrington argued stay necessary to protect her interests | Appellees and court emphasized Trustee’s duty to liquidate assets, creditors’ long delay, and public interest in expeditious administration | Denied: Stay would injure Trustee/creditors and impair public interest in prompt bankruptcy administration |
Key Cases Cited
- In re World Trade Center Disaster Site Litig., 503 F.3d 167 (2d Cir. 2007) (articulating stay-pending-appeal factors)
- In re Adelphia Commc’ns Corp., 333 B.R. 649 (S.D.N.Y. 2005) (party seeking stay bears heavy burden)
- In re Lynch, [citation="795 F. App'x 57"] (2d Cir. 2020) (conversion order reviewed for abuse of discretion)
- In re Blaise, 219 B.R. 946 (B.A.P. 2d Cir. 1998) (abuse-of-discretion review explained)
- In re Anderson, 560 B.R. 84 (S.D.N.Y. 2016) (district courts routinely dismiss stay motions not first presented to bankruptcy court)
- In re Alexander, 248 B.R. 478 (S.D.N.Y. 2000) (same)
- In re Hi-Toc Dev. Corp., 159 B.R. 691 (S.D.N.Y. 1993) (no irreparable injury where successful reorganization is unlikely)
- Maisonet v. Metro. Hosp. & Health Hosp. Corp., 640 F. Supp. 2d 345 (S.D.N.Y. 2009) (pro se litigants not excused from compliance with procedural rules)
- In re Sabine Oil & Gas Corp., 548 B.R. 674 (Bankr. S.D.N.Y. 2016) (stay-pending-appeal is exception, not rule)