Opinion
Case No. 302-08915, (Substantively Consolidated).
June 18, 2003.
ORDER
The Bank of Montreal as Administrative Agent for the senior secured lenders (hereinafter "Lenders") has requested a stay of the confirmation order pending appeal. The standard for a stay pending appeal under Federal Rule of Bankruptcy Procedure 8005 requires the consideration of four factors: (1) the likelihood the moving party will be irreparably harmed absent a stay; (2) the prospect that others will be harmed if the court grants the stay; (3) the likelihood that the party seeking the stay will prevail on the merits of the appeal; and (4) the public interest in granting the stay. In re Bradford, 192 B.R. 914 (E.D. Tenn. 1996). After considering these factors, the court denies the Lenders' motion for a stay.
1. Likelihood of Success on Appeal
The court finds that the Lenders do not have a substantial likelihood of success on appeal. Furthermore, the court disagrees that important legal questions are implicated that would allow a stay even without the likelihood of success on appeal. The question of interest rate determination is well-settled in the Sixth Circuit. See In re Kidd, 315 F.3d 671 (6th Cir. 2003). The issues relating to substantive consolidation and Lenders' 506 issues can all be raised and argued on appeal without the necessity for a stay. The court finds no reasonable likelihood of success on appeal on any of these issues, and therefore no pressing need to impose a stay.
2. Irreparable Harm
The Lenders' motion suggests it will be irreparably harmed because:
the debtors admit that they are insolvent, and will remain so post-confirmation. If there is a reversal of the Confirmation order, the Debtors will not be able to compensate the Lenders for the payments made to the Class 7 and Class 7 creditors and will not be able to pay an appropriate rate of return on the Class 2 and Class 5 claims.
The Lenders suggest that the clear evidence demonstrates the irreparable harm. The court disagrees. Much of the Lenders' argument is predicated upon the assumption that the court's confirmation order is likely to be reversed. This court does not believe that the Lenders' have a substantial likelihood of success on appeal, and therefore, the parades of horribles that the Lenders predicts are not likely to come to pass. The court finds that the Lenders, who are sophisticated entities with the risk of loss widely diversified among their holdings, would not be irreparably harmed even if there were a reversal.
3. Harm to Plaintiff if Stay Granted
The harm to the debtor is obvious if the stay is granted. It places the debtor in a holding pattern and frustrates the debtors' attempts to develop, grow, and rebuild this business. The harm to the debtors is that the "fresh start" granted by the confirmation order is further delayed. Upon a balancing of harms to the debtor and Lenders, the court finds that the scale is evenly balanced, therefore negating the need for a stay.
4. Public Policy
The court finds no public policy advocating the stay in this case.
For all of the above stated reasons, the court DENIES the Lenders' motion for a stay pending appeal pursuant to Federal Rule Bankruptcy Procedure 8005.
It is therefore SO ORDERED.