Opinion
Civil Action No. 01-0377. Section: "J"(3). (Bankruptcy Case No. 99-10406, Section B).
February 15, 2001.
I.G. Petroleum L.L.C. ("I.G.") is seeking to stay the Bankruptcy Court's January 2, 2001 Order (as amended on February 2, 2001) instructing the clerk of court to withdraw the funds previously deposited into the registry of the court, by or on behalf of I.G. (Case no. 99-10406). I.G. is appealing that ruling to this Court and seeks a stay of execution pending appeal. The Bankruptcy Court denied I.G.'s motion for a stay, concluding that I.G. had failed to establish the elements necessary to obtain a stay. Bankruptcy Court's Minute Entry dated Feb. 9, 2001.
The movant must establish (1) a strong likelihood of success on the merits of the appeal, (2) that movant will suffer substantial irreparable injury if the stay is denied, (3) that substantial harm will not be suffered by other parties if the stay is granted, and (4) that issuance of the stay would not harm the public interest. Bankruptcy Court's Minute Entry dated Feb. 9, 2001 (citing In re Shenandoah Realty Partners, L.P., 248 B.R. 505 (W.D. Va. 2000); In re Bankruptcy Appeal Allegheny Health, Educ. Res. Found., 252 B.R. 309 (W.D. Pa. 1999); In re Lykes Bros. Steamship Co., 221 B.R. 881 (Bankr. M.D. Fla. 1997); In re Hutchins, 216 B.R. 1 (Bankr. E.D. Ark. 1997)).
I.G. then filed a motion for stay in this Court, and on February 12, 2001, the Court temporarily stayed the matter pending consideration of I.G.'s motion. On February 13, 2001, I.G.'s motion for stay was heard on an expedited basis. During the hearing, the Court advised counsel that it concurred with the Bankruptcy Court's finding that I.G. had not met its burden under the factors set out in note 1, supra. However, the Court took the matter under advisement for the sole purpose of considering I.G.'s contention that it was entitled to a stay as of right upon posting a supersedeas bond. The Court gave the parties until 12 noon today to file any additional memoranda on this narrow issue of law.
Having now considered the memoranda and applicable law, the Court is of the opinion that I.G. is not entitled to a stay as of right upon posting of a bond. The source provision for an appeal as of right from a judgment of the Bankruptcy Court is Federal Rule of Civil Procedure 62 which is incorporated by reference into Bankruptcy Rule 7062 ("Stay of Proceedings to Enforce a Judgment"). Bankruptcy Rule 7062 reads in full: "Rule 62 F.R.Civ.P. applies in adversary proceedings." (emphasis added).
Federal Rule of Civil Procedure 62 ("Stay of Proceedings to Enforce a Judgment") reads in pertinent part:
(a) Automatic Stay; Exceptions — Injunctions, Receiverships, and Patent Accountings. Except as stated herein, no execution shall issue upon a judgment nor shall proceedings be taken for its enforcement until the expiration of 10 days after its entry. Unless otherwise ordered by the court, an interlocutory or final judgment in an action for an injunction or in a receivership action, or a judgment or order directing an accounting in an action for infringement of letters patent, shall not be stayed during the period after its entry and until an appeal is taken or during the pendency of an appeal.
Proceedings in bankruptcy cases can roughly be divided into three categories: (1) adversary proceedings, (2) administrative matters, and (3) contested matters. In re Coggin, 30 F.3d 1443, 1447 (11th Cir. 1994) (citing 9 Collier on Bankruptcy ¶ 9014.03 (15th ed. 1994)). Those matters which qualify as "adversary proceedings" are enumerated in Bankruptcy Rule 7001. "Contested matters" resemble adversary proceedings in that there are two parties opposing each other with respect to the relief sought by one of them. Id. However, Rule 7001 creates a line of delineation among the classifications because only those proceedings enumerated in Rule 7001 qualify as adversary proceedings. See id. And because Rule 7062 only makes the stay as of right provisions of Federal Rule of Civil Procedure 62 applicable to adversary proceedings, there is no authority granting the appellant a stay as of right pending appeal of a contested matter.
Rule 9014 ("Contested Matters") makes certain enumerated Bankruptcy Rules applicable to contested matters. Rule 9014 was amended in 1999 to delete Rule 7062 from the list of rules that apply automatically. As the Advisory Committee Notes recognize, following that amendment, a stay pending appeal (of a contested matter) upon posting of a bond is now within the discretion of the court. See Bankruptcy Rule 9014; Rule 9014 1999 Advisory Committee Notes.
In the instant case, I.G. seeks to appeal an order granting a motion to disburse funds from the court's registry for payment in accordance with the confirmed bankruptcy plan. Such a matter does not arguably fit into any of the proceedings enumerated in Rule 7001 as adversary proceedings. Other courts have recognized that an opposed motion to disburse funds held in the court's registry is a contested matter and not an adversary proceeding. See, e.g., In re Trans World Airlines, Inc., 18 F.3d 208, 212 (3d Cir. 1994). The Court also notes that other courts have recognized that an appeal in bankruptcy as of right by posting a bond is typically limited to an appeal from a money judgment or one transferring an interest in property. See, e.g., In re Capital W. Invest., 180 B.R. 240 (N.D. Calif. 1995); accord Colliers on Bankruptcy, ¶ 80005.03, at 8005-4. The order at issue in this case does neither.
Given the law outlined above, the Court concludes that I.G. is not entitled to a stay as of right. Rather, any grant of a stay is within the sound discretion of the Court. The Bankruptcy Court applied the appropriate standard when it denied I.G.'s request for a stay pending appeal, and this Court concurs in the Bankruptcy Court's finding that I.G. has not met its burden in demonstrating its entitlement to a discretionary stay.
During the emergency hearing conducted on February 13, 2001, the Court orally gave reasons for its conclusion that I.G. has not made a showing sufficient to warrant a stay pending appeal.
Accordingly;
IT IS ORDERED that I.G.'s Motion for Stay of Execution should be and is hereby DENIED; IT IS FURTHER ORDERED that the temporary stay previously issued by this Court halting execution of the Bankruptcy Court's order directing the Clerk of Court for the United States Bankruptcy Court for the Eastern District of Louisiana to withdraw funds deposited into the Registry of the Court by, or on behalf of I.G. Petroleum, L.L.C. should be and is hereby DISSOLVED.
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(d) Stay Upon Appeal. When an appeal is taken the appellant by giving a supersedeas bond may obtain a stay subject to the exceptions contained in subdivision (a) of this rule. The bond may be given at or after the time of filing the notice of appeal or of procuring the order allowing the appeal, as the case may be. The stay is effective when the supersedeas bond is approved by the court.