JAYADEEP RAMESH DESHMUKH, Appellant, v. UNITED STATES TRUSTEE OFFICE, Appellee.
Civil Action No. 25-4017 (MAS)
UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
September 17, 2025
SHIPP, District Judge
NOT FOR PUBLICATION; MEMORANDUM OPINION
SHIPP, District Judge
This matter comes before the Court upon pro se Appellant Jayadeep Ramesh Deshmukh‘s (“Appellant“) Motion for an Emergency Temporary Restraining Order (“TRO“). (ECF No. 7.) The United States Trustee Office (“Appellee“) opposed (ECF No. 12), and Appellant replied (ECF No. 13). The Court has carefully considered the parties’ submissions and decides the matter without oral argument pursuant to Local Civil Rule 78.1. For the reasons stated below, the Court denies Appellant‘s Motion.
I. BACKGROUND
On April 29, 2024, Appellant filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court“). (See generally Appellant‘s Voluntary Petition, Bankr. ECF No. 1.1) Included among his assets was a property at 458 Cherry Hill Road, Princeton, New Jersey, that he co-owned with his estranged wife as tenants
On December 30, 2024, Appellant filed a reorganization plan that was to be funded by the sale of the Property and income from a prospective job. (Appellant‘s Ch. 11 Combined Plan of Reorganization and Disclosure Statement § 2.4, Bankr. ECF No. 64; Appellant‘s Ch. 11 Combined Plan of Reorganization and Disclosure Statement Schedule I, Bankr. ECF No. 64-1.) Objections to the plan were interposed by several parties in interest, including the Internal Revenue Service, secured creditors, Appellant‘s estranged spouse (who asserted a domestic support obligation claim in the amount of $440,000), and Appellee. (See Bankr. ECF Nos. 73, 74, 77, 79, 81, 83.)
On March 19, 2025, Appellee filed a Motion to Convert the Case to a Chapter 7 Case, or, in the alternative, to Dismiss the Case (“Motion to Convert“).2 (See generally Mot. to Convert, Bankr. ECF No. 98.) Appellant did not oppose the motion. On March 20, 2025, the Bankruptcy Court held a hearing on Appellant‘s December 30, 2024 reorganization plan and found it was unconfirmable. (Tr. of Hr‘g on Mot. for Relief from Stay at 4:24-25, 5:3-5, Bankr. ECF No. 147.) At this same hearing, the Bankruptcy Court postponed the hearing on the Motion to Convert to a later date. (Id. at 7:5-7.)
On March 22, 2025, the Bankruptcy Court issued notice for a hearing on the Motion to Convert scheduled for April 24, 2025. (Notice of Hr‘g on Mot. to Convert 1, Bankr. ECF No. 99.) The Bankruptcy Court ultimately held the hearing on Appellee‘s Motion to Convert on April 25, 2025. (Tr. of Hr‘g on Mot. to Convert 1, Bankr. ECF No. 135.) Three days after this hearing, the
On May 15, 2025 and May 18, 2025, Appellant filed a Motion to Stay (ECF No. 3) and a Motion for a TRO (ECF No. 4), respectively, with this Court. The Court denied these motions on May 19, 2025 as procedurally deficient because they were not filed before the Bankruptcy Court in the first instance. (Text Order, ECF No. 5.) Appellant then filed a Motion for an Emergency TRO with the Bankruptcy Court (“Bankruptcy Court TRO Motion“) on May 19, 2025 (Bankruptcy Court TRO 1, Bankr. ECF No. 146), which the Bankruptcy Court expressed was procedurally deficient and would be construed as a motion to stay pending appeal (Appellant‘s Withdrawal of Mot. for Stay 1, Bankr. ECF No. 157). Appellant withdrew the Bankruptcy Court TRO Motion on June 3, 2025. (Id.)
On May 27, 2025, Appellant returned to this Court and filed a Motion for an Emergency TRO (“Emergent TRO Motion“). (Mot. for Emergency TRO 1, ECF No. 7.) Appellee opposed (Appellee‘s Opp‘n Br. 1, ECF No. 12), and Appellant replied (Appellant‘s Reply Br. 1, ECF No. 13). The Emergent TRO Motion is now ripe for review.
II. LEGAL STANDARDS
A. Motion for a TRO
“Preliminary injunctive relief is an extraordinary remedy and should be granted only in limited circumstances.” Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004) (internal quotation marks and citation omitted). A preliminary injunction or TRO3 may be granted
The movant bears the burden of establishing “the threshold for the first two ‘most critical’ factors.” Reilly v. City of Harrisburg, 858 F.3d 173, 179 (3d Cir. 2017). “If these gateway factors are met, a court then considers the remaining two factors and determines in its sound discretion if all four factors, taken together, balance in favor of granting the requested preliminary relief.” Id. A court may issue an injunction to a plaintiff “only if the plaintiff produces evidence sufficient to convince the district court that all four factors favor preliminary relief.” AT&T v. Winback & Conserve Program, 42 F.3d 1421, 1427 (3d Cir. 1994) (citation omitted); see also P.C. Yonkers, Inc. v. Celebrations the Party & Seasonal Superstore, LLC, 428 F.3d 504, 508 (3d Cir. 2005) (“The burden lies with the plaintiff to establish every element in its favor, or the grant of a preliminary injunction is inappropriate.“).
B. Appellate Standard of Review
A district court has appellate jurisdiction over a bankruptcy court‘s final judgments, orders, and decrees.
III. DISCUSSION
Appellant purports to seek injunctive relief pursuant to
A. Motion for a TRO
Because Appellant fails to show that he moved for a stay and/or TRO in the Bankruptcy Court in the first instance or that it was impracticable to do so, the Court finds that his motion is procedurally improper. See Fed. R. Bankr. P. 8007(b)(2)(A)-(B). While that error alone is dispositive of Appellant‘s motion,13 the Court nonetheless considers the merits of Appellant‘s motion and finds that the relief Appellant seeks is not warranted.
B. Motion for a Stay14
“Under [Bankruptcy Rule] 8007, a party can move to stay the effect of a bankruptcy court order pending a resolution on appeal.” Revel, 802 F.3d at 567-68; see also Fed. R. Bankr. P. 8007. “The granting of a motion for stay pending appeal[, however,] is discretionary with the court.” In re Trans World Airlines, Inc., No. 01-56, 2001 WL 1820325, at *2 (Bankr. D. Del. Mar. 27, 2001). That said, a stay pending appeal is an “extraordinary remedy.” In re W.R. Grace & Co., 475 B.R. 34, 205 (D. Del. 2012) (citing United States v. Cianfrani, 573 F.2d 835, 846 (3d Cir. 1978)). When considering a stay related to a bankruptcy appeal, courts apply a standard of review akin to that of a preliminary injunction, and analyze the following factors:
(1) whether the stay applicant has made a strong showing that [he] is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether [the] issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.
Revel, 802 F.3d at 568 (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)).
“Did the applicant make a sufficient showing that [(1)] [he] can win on the merits[—]significantly better than negligible but not greater than 50%[—]and [(2)] will suffer irreparable harm absent a stay? If [he] has, we balance the relative harms considering all four factors using a sliding[-]scale approach. However, if the movant does not make the requisite showings on either of these [first] two factors, the[] inquiry into the balance of harms [and the public interest] is unnecessary, and the stay should be denied without further analysis.”
S.S. Body Armor I, Inc. v. Carter Ledyard & Milburn LLP, 927 F.3d 763, 772 (3d Cir. 2019) (quoting Revel, 802 F.3d at 571) (internal quotation marks omitted).
To show a likelihood of success, Appellant must show “a reasonable chance, or probability, of winning.” Revel, 802 F.3d at 568 (quoting Singer Mgmt. Consultants, 650 F.3d at 229). So, while Appellant must show that his chance of success is more than negligible, he need not show that it is more likely than not that his appeal will be successful. See id. at 569 (citing Nken, 556 U.S. at 434 and Singer Mgmt. Consultants, 650 F.3d at 229).
“The bankruptcy court has broad discretion in deciding whether to dismiss or convert a Chapter 11 case.” Loop Corp. v. U.S. Trustee, 379 F.3d 511, 515 (8th Cir. 2004) (cited with approval in In re Prosser, 388 F. App‘x 99, 99-100 (3d Cir. 2010)). In order to convert or dismiss a Chapter 11 case, the bankruptcy court must: (1) issue notice and provide an opportunity to be heard; (2) demonstrate cause; and (3) proceed with the action in the best interests of creditors and the estate.
At the outset, the Court finds that Appellant is unlikely to succeed on the merits because he failed to raise the majority of his concerns before the Bankruptcy Court and thus did not preserve his arguments for appeal. An appellate court will not generally consider issues on appeal
a. Notice
“Due process requires notice that is ‘reasonably calculated to reach all interested parties, reasonably conveys all the required information, and permits a reasonable time for a response.‘” Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995) (quoting Greyhound Lines, Inc. v. Rogers (In re Eagle Bus Mfg., Inc.), 62 F.3d 730, 735 (5th Cir. 1995)). The court must give “notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the particular circumstances.”
Here, Appellant fails to meet his burden in demonstrating likelihood of success on his due process argument. Appellant‘s argument ignores the fact that the Bankruptcy Court issued notice of the hearing a full month before the hearing took place. (See generally Notice of Hr‘g on Mot. to Convert; Tr. of Hr‘g on Mot. to Convert.) The notice itself apprised Appellant that conversion of the case was at issue. (Notice of Hr‘g on Mot. to Convert Case 1.) Appellant had a month to prepare for the Chapter 11 conversion hearing. (See generally Notice of Hr‘g on Mot. to Convert; Tr. of Hr‘g on Mot. to Convert.) Moreover, Appellant did not ask for additional time or additional notice. See Sec‘y U.S. Dep‘t of Lab. v. Koresko, 726 F. App‘x 127, 133 (3d Cir. 2018) (party who “received adequate notice” of a contempt hearing yet “chose not to attend” or “object in writing” could not subsequently assert due process challenge). In light of the foregoing, Appellant‘s due process challenge is unlikely to succeed on the merits.
b. Cause
Cause is “subject to judicial discretion under the circumstances of each case.” In re Albany Partners, Ltd., 749 F.2d 670, 674 (11th Cir. 1984) (cited with approval in In re Am. Cap. Equip., 688 F.3d at 161). It is not limited to the list of enumerated examples included in Title 11.
Here, Appellant fails to show a likelihood of success of establishing that the Bankruptcy Court abused its discretion in finding that cause existed under Section 1112(b). At the hearing on the motion to convert, the Bankruptcy Court opined that “essentially [Appellant‘s] case as a Chapter 11, both legally and factually, was going nowhere,” that “[t]he oversight over the [P]roperty [wa]s . . . of concern to the [Bankruptcy C]ourt,” and that “[i]t would be a disservice to the creditor community in this case if the [Bankruptcy C]ourt was simply to allow the [Appellant] to continue outside of the bankruptcy what has continued as part of the Chapter 11.” (Tr. of Hr‘g on Mot. to Convert at 4:9-10, 7:3-4, 7:10-13.) This record raises several of the Section 1112(b)(4) enumerated causes, including “gross mismanagement of the estate” and “inability to effectuate substantial consummation of a confirmed plan.”
“[O]nce cause is found, the burden shifts to the opposing party to show why dismissal or conversion would not be in the best interests of the estate and the creditors.” In re Dr. R.C. Samanta Roy Inst. of Sci. Tech. Inc., 465 F. App‘x at 97.18 Put simply, once the Bankruptcy Court found cause under Section 1112, the burden shifted to Appellant to prove each part of Section 1112(b)(2) and demonstrate that his case presented “unusual circumstances establishing that converting or dismissing the case is not in the best interests of creditors and the estate.” See id. at 98;
To avoid conversion or dismissal, any party in interest must: (1) identify specific unusual circumstances; (2) establish a reasonable likelihood that a plan will be timely confirmed; and (3) demonstrate that the grounds for conversion or dismissal are a reasonably justifiable omission by the debtor-appellant that can be cured within a reasonable time period.
Here, Appellant fails to meet his burden in demonstrating likelihood of success on appeal regarding his arguments pertaining to conversion. That is, Appellant fails to show a likelihood of success on his arguments that the Bankruptcy Court should have: (1) found “unusual
Because Appellant fails to make the requisite showings on either likelihood of success on the merits or irreparable harm, the Court does not analyze the remaining factors of the analysis. See Revel, 802 F.3d at 571 (explaining that where a movant fails to make the requisite showings on either of the first two factors, “the [] inquiry into the balance of harms [and the public interest] is unnecessary, and the stay should be denied without further analysis“).
2. Irreparable Harm
Although the Court need not address the remaining factors, the Court briefly notes that even if Appellant were able to demonstrate likelihood of success on appeal, Appellant fails to demonstrate irreparable harm absent a stay. “[S]imply showing some ‘possibility of irreparable injury,’ fails to satisfy the second factor.” Nken, 556 U.S. at 434-35 (quoting Abbassi v. INS, 143 F.3d 513, 514 (9th Cir. 1998)). Rather, plaintiffs must “demonstrate that irreparable injury is likely in the absence of an injunction.” Winter, 555 U.S. at 22. This means that harm must be “neither remote nor speculative, but actual and imminent.” Revel, 802 F.3d at 571 (internal quotations
Here, the only conceivable harm that Appellant suffers is that a sale by a Chapter 7 trustee might result in a sale price in an amount less than what Appellant thinks the Property is worth.20 This, however, is insufficient to establish irreparable harm because it is too speculative. Furthermore, any potential economic loss from a sale of the Property below value would be purely monetary and therefore not constitute irreparable harm. See Acierno, 40 F.3d at 653. As such, Appellant has not shown that denying the stay will cause him irreparable harm.
Because Appellant fails to establish a likelihood of success on appeal and that he would be irreparably injured absent a stay, the last two factors need not be addressed. See Reilly, 858 F.3d at 179.
IV. CONCLUSION
For the reasons set forth above, the Court denies Appellant‘s Motion. An order consistent with this Memorandum Opinion will be entered.
MICHAEL A. SHIPP
UNITED STATES DISTRICT JUDGE