2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-30-2015

In Re: Revel AC Inc

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Recommended Citation

"In Re: Revel AC Inc" (2015). 2015 Decisions. Paper 1037.

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 15-1253 

In re: REVEL AC, INC., ET AL., 

 Debtors 

IDEA BOARDWALK, LLC, 

 Appellant 

 

Appeal from the United States District Court 

for the District of New Jersey

(D.C. Civil Action No. 1-15-cv-00299) 

District Judge: Honorable Jerome B. Simandle 

Argued February 6, 2015

Before: AMBRO, SHWARTZ, and KRAUSE, Circuit Judges 

(Opinion filed: September 30, 2015) 

Jeffrey A. Cooper, Esquire (Argued) 

Jonathan I. Rabinowitz, Esquire 
2

Barry J. Roy, Esquire

Rabinowitz, Lubetkin & Tully

293 Eisenhower Parkway, Suite 100

Livingston, NJ 07039

Counsel for Appellant

IDEA Boardwalk LLC

Michael Viscount, Jr., Esquire

John H. Strock, Esquire

Fox Rothschild

1301 Atlantic Avenue

Midtown Building, Suite 400

Atlantic City, NJ 08401

Jason N. Zakia, Esquire (Argued)

John K. Cunningham, Esquire

White & Case

200 South Biscayne Boulevard, Suite 4900

Miami, FL 33131

Counsel for Appellees/Debtors

Revel AC, LLC; Revel Atlantic City LLC;

Revel Entertainment Group LLC; 

NB Acquisition LLC; SI LLC

Stuart J. Moskovitz, Esquire

819 Highway 33

Freehold, NJ 07728

Counsel for Appellee 

Polo North Country Club Inc.
3 

Richard W. Riley, Esquire 

Duane Morris 

222 Delaware Avenue, Suite 1600 

Wilmington, DE 19801 

Sommer L. Ross, Esquire 

Duane Morris 

30 South 17th Street, United Plaza 

Philadelphia, PA 19103 

 Counsel for Appellees 

 Wells Fargo Bank NA; 

 Wells Fargo Principal Lending LLC 

OPINION OF THE COURT 

AMBRO, Circuit Judge 

We seldom focus on how to balance the four factors 

that determine whether to grant a stay pending appeal despite 

the practical and legal importance of these procedural 

standstills. So we take this opportunity to do just that.1

 

I. BACKGROUND 

 

1

 Because of the time-sensitive nature of this appeal, we were 

unable to give a full rationale for our ruling on the date we 

entered judgment in favor of Appellant IDEA Boardwalk, 

LLC, reversing the District Court’s denial of its stay request. 

This opinion does so.
4

In April 2012 Appellee Revel AC, Inc., et al.

(“Revel”) opened a 47-story, 710-foot-high resort-casino 

(which we refer to simply as the “Casino”) in Atlantic City, 

New Jersey. The Casino was marketed as “a state of the art 

gaming and resort facility unlike any other in Atlantic City.” 

Its cost: $2.4 billion, making it the most expensive hotel ever 

built in Atlantic City. See Tom Corrigan, Atlantic City’s 

Revel Casino Files for Bankruptcy Again, Wall Street J. (June 

19, 2014, available at http://www.wsj.com/articles/atlanticcitys-revel-casino-files-for-bankruptcy-again-1403212625). 

As part of its plan for the Casino, Revel entered into a lease 

with Appellant IDEA Boardwalk, LLC (“IDEA”) to run two 

upscale nightclubs and a beach club. The lease was for a 10-

year term (with a 15-year option to extend) and obligated 

IDEA to contribute $16 million of the $80 million projected 

cost of construction of the clubs (in addition to its monthly 

rental payments as lessee). 

Unfortunately the Casino’s $2.4 billion price tag was 

no indication of its future success. A sluggish Atlantic City 

economy and the Casino’s inability to turn a profit were too 

much for Revel to overcome. After a failed sale attempt, 

Revel’s cash flow problems made a (second) trip to 

bankruptcy the only option.2 It filed a so-called 

“Chapter 22” on June 19, 2014.3 As part of its first-day 

 

2

 Revel had previously filed under Chapter 11 of the 

Bankruptcy Code in March 2013 and confirmed a plan of 

reorganization in May of that same year. 

3

 A number of Revel’s subsidiaries also filed for bankruptcy. 

They include Revel AC, LLC, Revel Atlantic City, LLC, 

Revel Entertainment Group, LLC, NB Acquisition, LLC, and 

SI LLC. For convenience, we refer to Revel and its 

subsidiaries jointly and severally as “Revel.” 
5

filings, Revel asked the Bankruptcy Court for permission to 

sell its assets free and clear of all liens and interests (which 

includes leases) and to approve bid procedures to allow that 

sale as quickly as possible. The Court approved the request 

and set August 7, 2014 as the auction date. 

A. Revel’s Attempt to Sell the Casino in 

Bankruptcy

The request to sell the Casino “free and clear” raised 

the ire of its tenants—among them, IDEA.4 Its concern was 

that, were the sale as proposed to occur, the value of its lease 

would turn to zero notwithstanding its initial $16 million 

investment. To protect that investment, IDEA filed 

objections to the proposed sale. It made clear that its intent 

was not to scuttle the sale, but to block Revel from selling the 

Casino stripped of its lease. Citing 11 U.S.C. § 365(h), IDEA 

argued that, notwithstanding a rejection of that lease, it can 

retain its possessory interest, as the subsection provides that a

lessee may retain its rights under such lease 

. . . for the balance of the term of such lease 

and for any renewal or extension of such 

rights to the extent that such rights are 

enforceable under applicable nonbankruptcy 

law. 

11 U.S.C. § 365(h)(1)(A)(ii). Alternatively, IDEA contended 

that even if § 365(h) did not secure its interest, § 363(f)—the 

 

4

 The other tenants include: (1) the so-called “Amenity 

Tenants” (made up of a group of companies that operated an 

array of food, liquor, and retail establishments within the 

Casino); and (2) ACR Energy Partners (the provider of water 

and power to the Casino). 
6

Code provision that allows for the sale of an asset free and 

clear5—was of no use to Revel, as it couldn’t satisfy any of 

the five alternative conditions necessary to trigger a sale 

under its strictures. 

Notwithstanding the objection of IDEA, Revel 

continued the auction process and embarked on a lengthy 

marketing campaign, communicating with over 200 potential 

investors. Unfortunately the market for Revel’s assets proved 

thin, and, because not a single qualified buyer came to the 

table, the Bankruptcy Court postponed the August 7 auction. 

About a month later, on September 2, Revel closed the 

Casino’s doors and barred its tenants, IDEA included, from 

accessing the Casino premises. When that happened, IDEA 

gave written notice that (1) it intended to continue operating 

its beach club and one of its nightclubs notwithstanding the 

Casino’s closure and (2) it expected Revel to continue to 

abide by the terms of its lease. More specifically, IDEA 

asked that Revel “continue to honor its obligation under the 

Lease to provide uninterrupted utility service.” Am. Compl. ¶ 

96, IDEA Boardwalk, LLC v. Revel Entm’t Grp., LLC, No. 

14-01756 (Bankr. D.N.J. Sept. 26, 2014), ECF No. 6. To put 

its plan into action, IDEA met with representatives from 

 

5

 Subsection 363(f) provides that a debtor can sell its assets 

free and clear of “any interest” (here a lease) if (1) applicable 

nonbankruptcy law so permits, (2) the interest holder 

consents, (3) the interest is a lien and the price at which the 

debtor’s assets are being sold is greater than the value of all 

the liens on its property, (4) the validity of the interest is in 

bona fide dispute, or (5) the interest holder, whether in a legal 

or equitable proceeding, could be compelled to accept a 

money judgment for its interest. 11 U.S.C. § 363(f)(1)–(5). 
7

various city agencies to secure approval to operate on a standalone basis and sued Revel to enjoin it from “failing to 

provide utilities and parking” and engaging in any other 

conduct “that prevents IDEA from operating the HQ Dayclub 

and HQ Nightclub in accordance with the terms of the 

Lease.” Id. ¶ 118. Furthermore, and to assert its rights under 

§ 365(h), IDEA sought a declaratory judgment that, “under 

applicable law[,] the Lease is a lease of non-residential real 

property as that term is defined and governed by 11 U.S.C. § 

365 and, as such, is entitled to all relevant statutory 

protections, including, but not limited to[,] 11 U.S.C. § 

365(h).” Id. ¶ 144(a).6 

B. Polo North Becomes “Stalking Horse” 

Bidder

Revel’s continued marketing efforts paid off when it 

came to terms on September 5, 2014 with Polo North Country 

Club, an entity controlled by a Florida-based real estate 

developer. Under the proposed Asset Purchase Agreement, 

Polo North agreed to buy the Casino for $90 million and to 

serve as the “stalking horse” bidder at the upcoming auction. 

If Polo North lost at auction, it would receive $3 million as a 

break-up fee. If, however, Polo North walked away from the 

deal, it would surrender its $10 million deposit. The 

Bankruptcy Court approved Revel’s request to modify the 

 

6

 In connection with Revel’s first bankruptcy case, IDEA 

likewise sought, among other things, essentially the same 

declaration. Am. Compl. ¶ 89(a), IDEA Boardwalk, LLC v. 

Revel AC, Inc., No. 13-2013 (Bankr. D.N.J. May 30, 2014), 

ECF No. 7. In its answer, Revel “[d]enied” IDEA’s 

allegation that it held a non-residential lease. See Answer ¶¶ 

82–89, IDEA Boardwalk, LLC v. Revel AC, Inc., No. 13-2013 

(Bankr. D.N.J. June 13, 2014), ECF No. 8. 
8

auction bid procedures to allow for the payment of the breakup fee and set a revised bid deadline for September 24, 2014. 

At the postponed auction, which ultimately took place on 

October 1, the highest bidder was not Polo North but 

Brookfield U.S. Holdings, LLC, as its $110 million bid 

topped the $94.5 million all-cash bid of Polo North. The 

Bankruptcy Court approved the sale to Brookfield on 

October 7.

Reentering the picture, IDEA argued that “it has the 

right under Section 365(h) of the [] Code to elect to remain in 

possession and[,] in that event, [Revel] [is] obligated to 

provide possession and rights appurtenant thereto,” including 

“various easements for utilities and other services.” 

Objection of IDEA Boardwalk, LLC ¶¶ 74, 77, In re Revel 

AC, Inc., No. 14-22654 (Bankr. D.N.J. Oct. 13, 2014), ECF 

No. 754. IDEA also reaffirmed that, because it “has direct 

access to the boardwalk and the streets,” it “can operate [its 

clubs] without impinging . . . [Revel’s] possessory rights.” 

Id. ¶ 78. 

Before Revel could respond, Brookfield walked away 

from the deal, thus surrendering its $11 million deposit and 

bringing Polo North back into the fold as the back-up winning 

bidder. The Bankruptcy Court thereafter granted Revel’s 

motion to terminate the sale to Brookfield and scheduled a 

hearing to approve the sale to Polo North. 

C. Revel Responds to IDEA at the 11th Hour 

Late on the Friday night just three days before the 

January 5, 2015 sale hearing, Revel filed an “Omnibus 

Reply” to IDEA’s objections. Regarding the latter’s § 365(h) 

argument, Revel urged the Court to follow the Seventh 

Circuit’s decision in Precision Indus., Inc. v. Qualitech Steel 

SBQ, LLC, 327 F.3d 537 (7th Cir. 2003), which held that 
9

§ 365(h) doesn’t disable § 363(f)’s authority to sell property 

subject to a lease free and clear of that lease and instead 

triggers only when a debtor seeks to reject a lease under § 

365. Id. at 548. Revel also asserted that it could satisfy one of 

§ 363(f)’s five conditions—namely, § 363(f)(4)—because a 

bona fide dispute exists with respect to the validity of IDEA’s 

lease. According to Revel, though the form of its agreement 

with IDEA gives the appearance of a lease, because rent was 

“based entirely on a percentage of the revenue derived from” 

IDEA’s operations, it was not a “true lease[] entitled to 

benefit from the applicable protections set forth in the 

Bankruptcy Code.” Debtors’ Omnibus Reply ¶ 20, In re 

Revel AC, Inc., No. 14-22654 (Bankr. D.N.J. Jan. 2, 2015), 

ECF No. 1109. 

D.The Sale Hearing

At the sale hearing, the Bankruptcy Court considered 

the following legal issues: (1) whether sales of property under 

§ 363(f) can wipe out a lessee’s possessory interest under 

§ 365(h); and (2) whether Revel introduced enough evidence 

to show that the validity of IDEA’s lease was the subject of a 

bona fide dispute under § 363(f)(4), thus satisfying an 

eligibility requirement to invoke subsection (f).7 Only if the 

 

7

 The Bankruptcy Court did not address whether IDEA 

would receive adequate protection under 11 U.S.C. § 363(e) 

if the Casino were sold free and clear of its lease. Under that 

provision, where a tenant expects to lose its lease and asks for 

protection of its interest, “the court, with or without a hearing, 

shall prohibit or condition such use, sale, or lease as is 

necessary to provide adequate protection of such interest.” 

 
10

Court found in favor of Revel on each of these two issues 

could it sell the Casino free and clear of IDEA’s lease. 

On the first issue, the Bankruptcy Court pointed to a 

“split of authority”: some courts hold that § 363(f) doesn’t cut 

off a tenant’s possessory rights under § 365(h), see, e.g., In re 

Zota Petroleums, LLC, 482 B.R. 154, 163 (Bankr. E.D. Va. 

2012), while others go another path to say that § 365(h) “says 

nothing at all about sales of estate property, which are the 

province of section 363,” Qualitech, 327 F.3d at 547, the 

result in the latter case being that sales of property under § 

363 can cut off the possessory interests of lessees under § 

365. See Sale Hr’g Tr. 51:9-13, In re Revel AC, Inc., No. 14-

22654 (Bankr. D.N.J. Jan. 8, 2015), ECF No. 1175. 

The second issue, the Bankruptcy Court conceded, 

presented “the more difficult” legal question: whether Revel 

had enough evidence to show that the validity of IDEA’s 

lease was the subject of a bona fide dispute under § 363(f)(4). 

Id. at 52:21–22. The trouble was that Revel didn’t provide 

the purportedly disputed lease to the Bankruptcy Court or 

much of anything to cloud its validity, though § 363(f) places 

the burden squarely on Revel’s shoulders. See id. at 53:3–5 

(“[Revel] didn’t give me any of the leases . . . or any, really, 

evidence in support of its position of the bona[]fide dispute . . 

. .”). But, because of the need to push the sale through, the 

Court maintained that it “can’t look at the result totally as to 

what the law requires,” id. at 53:8, though, if time weren’t of 

the essence, it “probably would have put [the hearing] off to 

have more evidence presented,” id. at 55:12–13. With not 

much to go on, the Court concluded that, because IDEA (and 

the other tenants) were akin to “partners of [Revel’s] 

enterprise,” id. at 54:14–15, rather than mere tenants, Revel 

met its burden that “there is a bona[]fide issue in dispute” as 

to the leases, id. at 55:16–17. Hence the Court approved the 

sale and allowed Revel to sell its assets “free and clear of 
11

existing tenancies and/or possessory rights, irrespective of 

any rights a tenant may hold under 11 U.S.C. § 365(h), 

including, but not limited to, all possessory rights.” Sale 

Order ¶ 14, In re Revel AC, Inc., No. 14-22654 (Bankr. D.N.J. 

Jan. 8, 2015), ECF No. 1138. 

IDEA appealed that order and moved to stay the 

Court’s decision pending appeal, noting the risk that, if the 

decision were not stayed, its appeal would be moot under 

11 U.S.C. § 363(m) once the sale closed. That provision 

provides, in relevant part, that

[t]he reversal or modification on appeal of an 

authorization . . . of a sale or lease of property 

does not affect the validity of a sale or lease 

under such authorization to an entity that 

purchased or leased such property in good faith, 

whether or not such entity knew of the 

pendency of the appeal, unless such 

authorization and such sale or lease were stayed 

pending appeal.

11 U.S.C. § 363(m). In a one-paragraph order, the 

Bankruptcy Court denied IDEA’s request. With its options 

dwindling and time winding down, IDEA filed an emergency 

motion before the District Court to stay the Bankruptcy 

Court’s sale order. 

E. The District Court Denies IDEA’s Stay 

Request

In considering whether to grant a stay pending appeal, 

courts consider the following four factors: (1) whether the 

appellant has made a strong showing of the likelihood of 

success on the merits; (2) will the appellant suffer irreparable 

injury absent a stay; (3) would a stay substantially harm other 
12

parties with an interest in the litigation; and (4) whether a stay 

is in the public interest. See, e.g., Republic of Phil. v. 

Westinghouse Electric Corp., 949 F.2d 653, 658 (3d Cir. 

1991). Because IDEA is the only party before us, we limit 

our examination of the District Court’s ruling to its treatment 

of IDEA’s objections. 

1. Likelihood of Success 

On the first prong, the District Court maintained that 

IDEA needed to show that it had a “substantial” or “strong” 

case on appeal. In re Revel AC, Inc., 525 B.R. 12, 24 (D.N.J. 

2015) (internal quotation marks omitted). Addressing 

§ 365(h) first, the Court noted that, because the legal issue 

was the subject of an “undisputed split of authority,” IDEA at 

most showed a possibility and not a likelihood (which we 

understood the Court to mean more likely than not) of 

success. Id. (internal quotation marks omitted).

It next addressed whether the Bankruptcy Court 

clearly erred in finding that Revel put forth enough evidence 

to show that a bona fide dispute existed as to the validity of 

IDEA’s lease. See id. at 26. Despite the Bankruptcy Court’s 

failure to mention it, the District Court emphasized that 

“IDEA specifically sought a declaratory judgment concerning 

the nature of [its] agreement with [Revel],” id. at 29, even 

though, as IDEA asserted, its lawsuit “principally concerned 

[its] request for an energy easement, rather than an effort . . . 

to challenge the characterization of its Agreement,” id. at 29 

n.14. In the District Court’s view, the pending litigation 

“arguably provide[d] some objective basis . . . to find . . . 

some bona fide issue in dispute,” id. at 29 (emphases added), 

because, “in answering [the] complaint, [Revel] specifically 

denied that [the] Agreement constituted a lease,” id. at 29 

n.14. Consequently, the District Court concluded that IDEA 
13

did not “demonstrate[] a likelihood of success on the merits” 

of the § 363(f)(4) issue either. Id. at 30.8 

2. Irreparable Harm 

On the irreparable-harm prong, the District Court 

considered whether IDEA had “demonstrated the potential for 

an actual and imminent, rather than remote or speculative, 

irreparable harm.” Id. at 31. IDEA posited that, absent a stay, 

if Revel and Polo North closed on the sale, this would render 

its claim statutorily moot under § 363(m), leading to the loss 

of its lease and the end of its business at the Casino. In the 

 

8

 The District Court came to the same conclusion regarding 

whether Revel satisfied § 363(e)’s adequate protection 

requirement. IDEA had argued that adequate protection 

means continued possession of its lease, not merely money 

damages, as the Code provides that “adequate protection may 

be provided by . . . granting such other relief . . . as will result

in the realization by such entity of the indubitable equivalent 

of such entity’s interest in such property.” 11 U.S.C. § 

361(3). But the Court thought otherwise, declaring that 

rejection damages were an adequate substitute for continued 

possession. See In re Revel, 525 B.R. at 31 (noting that “it is 

more than arguable that granting possession to [IDEA] in the 

present circumstances of a catastrophically failed casino-hotel 

concept would be no more ‘adequate’ than what [it] received, 

namely, the right to assert [a] claim[] for rejection damages or 

other relief as [an] unsecured creditor[]”). It also minimized 

the Bankruptcy Court’s failure to make any findings on 

whether IDEA’s interest would be adequately protected. In 

the District Court’s view, because the Bankruptcy Court 

found that § 363(f) was satisfied, it “necessarily found the 

interests of [the various tenants] adequately protected.” Id.
14

District Court’s view, a mooted claim doesn’t qualify as an 

irreparable injury nor does the potential loss of IDEA’s 

possessory rights. See id. Regarding the latter, the Court 

noted that IDEA effectively had been dispossessed since 

September 2014 and would gain nothing by retaking 

possession of a space “in an empty and commerciallyunproductive building.” Id. at 32; see also id. at 31 

(“[T]hough the [tenants] assert that the loss of their 

possessory rights would result in irreparable injury, [they] 

ignore that they have been without valuable possessory rights 

since September 2014.”). Hence, as with the first prong, the 

Court held it did not weigh in IDEA’s favor.

3. Harm to Others 

For the third factor in the stay analysis, IDEA 

contended that, because it doesn’t seek a stay of the sale itself

but only the provision of the Sale Order that terminates its 

lease, Revel wouldn’t be injured. The District Court, 

focusing only on the debtor (presumably because it was the 

only party opposing IDEA’s stay motion), thought otherwise. 

In its view, because of the “easily terminable $10 million 

option [of Polo North] to purchase [Revel’s] assets,” there 

was a good chance it “would elect not to proceed with 

closing” if the Court granted the stay. Id. at 32 (internal 

quotation marks omitted). And “the palpable risk of losing a 

ready buyer,” the Court maintained, “demonstrates . . . a risk 

of substantial harm to [Revel].” Id. (emphasis omitted); see 

also id. at 33 (describing Revel’s exhaustive search for a 

buyer that yielded only two qualified buyers). Thus it found 

that the third factor weighed against a stay.

4. Public Interest 

Finally, IDEA asserted that the public interest favors a 

stay because the public has a strong interest in the correct 
15

application of bankruptcy law and the continuing operation of 

hospitality providers at Revel. Again the District Court 

disagreed. In its view, even assuming that IDEA expressed 

valid public policy concerns, “such concerns would not 

sufficiently outweigh the far more prevalent interest in 

facilitating the success of bankruptcy proceedings,” id., along 

with the “permanent loss of approximately 4,000 jobs” and 

“substantial detriment to the City of Atlantic City and [] 

surrounding areas” a failed sale could trigger, id. at 34 

(internal quotation marks omitted). As with the first three 

factors, the public interest “favors the facilitation of the asset 

sale, and, accordingly, weighs against the imposition of a 

stay.” Id. 

IDEA appeals. 

II. JURISDICTION 

Revel argues that we don’t have jurisdiction to 

entertain IDEA’s appeal from the District Court’s stay denial 

under either 28 U.S.C. § 158(d)(1) or 28 U.S.C. § 1292(a)(1). 

We disagree. Subsection 158(d)(1) provides that “[t]he courts 

of appeals shall have jurisdiction of appeals from all final 

decisions, judgments, orders, and decrees” entered under 

subsections 158(a) and (b). Though a stay denial is not 

technically a final judgment, it is here in a practical sense 

because, under 11 U.S.C. § 363(m), the upshot of declining 

IDEA’s stay request is to prevent it from obtaining a full 

airing of its issues on appeal and a decision on the merits, as 

that provision protects purchasers from any modification on 

appeal of an order authorizing a sale. Consequently, the 

District Court’s decision denying IDEA’s stay request was 

final for purposes of § 158(d)(1). See In re Trans World 

Airlines, Inc., 18 F.3d 208, 215 (3d Cir. 1994) 

(acknowledging that “finality must be viewed more 

pragmatically in bankruptcy appeals under § 158(d) than in 
16

other contexts”); see also James M. Grippando, Circuit Court 

Review of Orders on Stays Pending Bankruptcy Appeals to 

U.S. District Courts or Appellate Panels, 62 Am. Bankr. L.J. 

353, 360 (1988) (arguing that “‘finality’ for purposes of 

section 158 is a fluid concept to be determined [on] a case by 

case basis”). 

Our decision in Trans World Airlines is not to the 

contrary. The question there was whether the District Court’s 

grant of a stay was final for purposes of § 158(d). We held 

that it was not, “[e]ven under the most relaxed concept of 

finality,” because the stay grant didn’t “fully adjudicate a 

specific adversary proceeding between the parties.” In re 

Trans World Airlines, 18 F.3d at 216. The difference here is 

that the District Court denied a stay, and the practical effect 

was to resolve IDEA’s appeal on the merits, as the 

combination of the imminent closing of the sale and § 363(m) 

would have mooted its appeal. 

Thus, where it is all but assured that a statute will 

render an appeal moot absent a stay, a stay denial is 

appealable under § 158(d)(1). We express no opinion on 

whether we have also have jurisdiction under 28 U.S.C. § 

1292(a)(1)—see generally In re Forty-Eight Insulations, Inc., 

115 F.3d 1294, 1300 (7th Cir. 1997) (exercising jurisdiction 

over a stay denial under 28 U.S.C. § 1292(a)(1) because the 

District Court’s order had “both the effect of an injunction 

and [] serious, perhaps irreparable, consequences” (quoting 

Cent. States v. Cent. Cartage Co., 84 F.3d 988, 991 (7th Cir. 

1996) (internal quotation marks omitted))—and leave for 

another day whether we have jurisdiction to review a stay 

denial where the underlying appeal could become equitably 

moot. 

III. STANDARD OF REVIEW
17

At this juncture, only the District Court’s denial of 

IDEA’s stay request is at issue. We generally review appeals

from a denial of a stay for abuse of discretion, see Bradley v. 

Pittsburgh Bd. of Educ., 910 F.2d 1172, 1175 (3d Cir. 1990), 

giving “proper regard to . . . [the District Court’s] ‘feel’ of the 

case,” Omega Importing Corp. v. Petri-Kine Camera Co., 451 

F.2d 1190, 1197 (2d Cir. 1971) (Friendly, J.) (citation 

omitted). However, we review de novo the District Court’s 

decision on the likelihood of success, for it involves a purely 

legal determination. See In re Forty-Eight Insulations, 115 

F.3d at 1301. 

IV. ANALYSIS

Despite the growing importance of stays pending 

appeal, we have provided little direction on how to balance 

the four stay factors, mostly “[b]ecause this [C]ourt ordinarily 

grants or denies a stay pending appeal without opinion.” 

Westinghouse Electric Corp., 949 F.2d at 658. Despite its 

comprehensiveness, Westinghouse unfortunately shed little 

light on how to balance the four stay factors when not all of 

them point in the same direction. (The factors there all 

favored a stay denial.) We take this opportunity to provide 

guidance on how to conduct a balancing of the stay factors. 

A. The Sliding-Scale Approach to Balancing the 

Stay Factors

Under Federal Rule of Bankruptcy Procedure 8007, a 

party can move to stay the effect of a bankruptcy court order 

pending a resolution on appeal. See Fed. R. Bankr. P. 8007. 

The factors considered “overlap” the familiar ones courts 

look to in ruling on applications for preliminary injunctions. 

See Nken v. Holder, 556 U.S. 418, 434 (2009) (observing that 

“similar concerns arise whenever a court order may allow or 

disallow anticipated action before the legality of that action 
18

has been conclusively determined”). To repeat essentially 

what was already noted above, the following factors come 

into play:

(1) whether the stay applicant has made a 

strong showing that [it] is likely to succeed on 

the merits; (2) whether the applicant will be 

irreparably injured absent a stay; (3) whether 

issuance of the stay will substantially injure 

the other parties interested in the proceeding; 

and (4) where the public interest lies. 

Hilton v. Braunskill, 481 U.S. 770, 776 (1987). In order not 

to ignore the many gray shadings stay requests present, courts 

“balance[e] them all” and “consider the relative strength of 

the four factors.” Brady v. Nat’l Football League, 640 F.3d 

785, 789 (8th Cir. 2011) (quoting Fargo Women’s Health 

Org. v. Schafer, 18 F.3d 526, 538 (8th Cir. 1994) (internal 

quotation marks omitted)); see also 16A Charles Alan Wright 

et al., Federal Practice and Procedure § 3954 (4th ed. 2008) 

(“The four factors should be balanced; thus, for example, if 

the balance of harms tips heavily enough in the stay 

applicant’s favor then the showing of likelihood of success 

need not be as strong, and vice versa.” (footnotes omitted)). 

“[T]he most critical” factors, according to the Supreme 

Court, Nken, 556 U.S. at 434, are the first two: whether the 

stay movant has demonstrated (1) a strong showing of the 

likelihood of success and (2) that it will suffer irreparable 

harm—the latter referring to “harm that cannot be prevented 

or fully rectified” by a successful appeal, Roland Mach. Co. 

v. Dresser Indus., 749 F.2d 380, 386 (7th Cir. 1984) (Posner, 

J.). Though both are necessary, the former is arguably the 

more important piece of the stay analysis. As Judge Posner 

has remarked, it isn’t enough that the failure to obtain a stay 

will be “a disaster” for the stay movant but only a “minor 
19

inconvenience to the defendant,” as “[e]quity jurisdiction 

exists only to remedy legal wrongs; [thus,] without some 

showing of a probable right[,] there is no basis for invoking 

it.” Id. at 387.

Just how strong of a merits case must a stay applicant 

show? The “formulations used to describe the degree of 

likelihood of success that must be shown” vary widely. 

Mohammed v. Reno, 309 F.3d 95, 100 (2d Cir. 2002) 

(emphasis in original). To give but a sampling of the range 

that exists, some require a showing that the underlying appeal 

is “more likely to succeed than fail.” Abdul Wali v. Coughlin, 

754 F.2d 1015, 1026 (2d Cir. 1985) overruled on other 

grounds by O’Lone v. Estate of Shabazz, 482 U.S. 342 

(1987). Others call for a “substantial possibility, although 

less than a likelihood, of success.” Dubose v. Pierce, 761 

F.2d 913, 920 (2d Cir. 1985)9(quoting Hayes v. City Univ. of 

N.Y., 503 F. Supp. 946, 963 (S.D.N.Y 1980)) vacated on 

other grounds 108 S.Ct. 2890 (1988); see also generally John 

Y. Gotanda, The Emerging Standards for Issuing Appellate 

Stays, 45 Baylor L. Rev. 809, 813–15 (1993). For our Court, 

a sufficient degree of success for a strong showing exists if 

there is “a reasonable chance, or probability, of winning.” 

Singer Mgmt. Consultants, Inc. v. Milgram, 650 F.3d 223, 

229 (3d Cir. 2011) (en banc). Thus, while it “is not enough

that the chance of success on the merits be ‘better than 

negligible,’” Nken, 556 U.S. at 434 (citation omitted), the 

likelihood of winning on appeal need not be “more likely than 

not,” Singer Mgmt. Consultants, 650 F.3d at 229; see also

Wash. Metro. Area Transit Comm’n v. Holiday Tours, Inc., 

559 F.2d 841, 844 (D.C. Cir. 1977) (noting that the trouble 

 

9

 Yes, we realize this is the same Circuit Court in the same 

year. Read on and realize that we are not immune from 

internal tensions in our opinions. 
20

with a “strict ‘probability’ requirement is [] it leads to an 

exaggeratedly refined analysis of the merits at an early stage 

in the litigation”). 

On the second factor, the applicant must “demonstrate 

that irreparable injury is likely [not merely possible] in the 

absence of [a] [stay].” Winter v. Natural Res. Def. Council, 

Inc., 555 U.S. 7, 22 (2008) (emphasis in text). While a 

reference to “likelihood” of success on the merits has been 

interpreted by courts to cover the generic range of outcomes, 

for irreparable harm we understand the Supreme Court’s use 

of “likely” to mean more apt to occur than not. See generally 

Michigan v. U.S. Army Core of Engineers, 667 F.3d 765, 788 

(7th Cir. 2011) (holding that for harm to be likely “there must 

be more than a mere possibility that harm will come to pass 

... but the alleged harm need not be occurring or be certain 

before a court may grant relief”) (citation omitted).

“Once an applicant satisfies the first two factors, the 

traditional stay inquiry calls for assessing the harm to the 

opposing party and weighing the public interest.” Nken, 556 

U.S. at 435. We weigh the likely harm to the movant (absent 

a stay) (factor two) against the likely irreparable harm to the 

stay opponent(s) if the stay is granted (factor three). This is 

called the balancing of harms or balancing of equities. We 

also take into account where the public interest lies (factor 

four)—in effect, how a stay decision has “consequences 

beyond the immediate parties.” Roland Mach., 749 F.2d at 

388. 

In this context, a number of outcomes are possible. 

Where the balance of harms and public interest weigh in 

favor of a stay and the court deems that the stay movant has 

made a sufficient showing of success on appeal, a stay should 

be granted. Where the opposite is true—i.e., the merits, 

balance of harms, and public interest favor the stay 
21

opponent—a stay should be denied. Between these easy 

examples are the more difficult cases, such as “where the 

merits favor one party and the balance of harms favors the 

other.” Gotanda, supra, at 821. There (along with the public 

interest) we must “evaluate the degree of irreparable injury 

with the prospects of prevailing on the merits.” Id. 

In deciding how strong a case a stay movant must 

show, we have viewed favorably what is often referred to as 

the “sliding-scale” approach. See Constructors Ass’n of W. 

Pa. v. Kreps, 573 F.2d 811, 815 (3d Cir. 1978); Del. River 

Port Auth. v. Transamerican Trailer Transp., Inc., 501 F.2d 

917 (3d Cir. 1974). Under it, “[t]he necessary ‘level’ or 

‘degree’ of possibility of success will vary according to the 

court’s assessment of the other [stay] factors.’” Mohammed, 

309 F.3d at 101 (second alteration in original) (quoting Wash. 

Metro., 559 F.2d at 843). Stated another way, “[t]he more 

likely the plaintiff is to win, the less heavily need the balance 

of harms weigh in [its] favor; the less likely [it] is to win, the 

more need it weigh in [its] favor.” Roland Mach., 749 F.2d at 

387. As we described in Kreps (in considering all four 

factors though in the context of deciding whether to grant a 

preliminary injunction), 

in a situation where factors of irreparable harm, 

interests of third parties and public 

considerations strongly favor the moving party, 

an injunction might be appropriate even though 

plaintiffs did not demonstrate as strong a 

likelihood of ultimate success as would 

generally be required. In contrast, where the 

threatened irreparable injury is limited or is 

balanced to a substantial degree by 

countervailing injuries which would result to 

third parties, or to the public interest from the 

issuance of an injunction, greater significance 
22

must be placed upon the likelihood that the 

party will ultimately succeed on the merits of 

the litigation. 

573 F.2d at 815 (footnotes omitted) (internal quotation marks 

omitted); see In re A & F Enters., Inc. II, 742 F.3d 763, 766 

(7th Cir. 2014) (“As with a motion for a preliminary 

injunction, a ‘sliding scale’ approach applies; the greater the 

moving party’s likelihood of success on the merits, the less 

heavily the balance of harms must weigh in its favor, and vice 

versa.”); Mohammed, 309 F.3d at 101 (“The probability of 

success that must be demonstrated is inversely proportional to 

the amount of irreparable injury plaintiff[] will suffer absent 

the stay. Simply stated, more of one excuses less of the 

other.” (alteration in original) (quoting Mich. Coal. of 

Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 

150, 153 (6th Cir. 1991). 

Keeping in mind that the first two factors are the most 

critical, if “the chance of success on the merits [is only] better 

than negligible” and the “possibility of irreparable injury” is 

low, a stay movant’s request fails. Nken, 556 U.S. at 434 

(internal quotation marks omitted). Likewise, “even if a 

movant demonstrates irreparable harm that decidedly

outweighs any potential harm to the [stay opponent] if a stay 

is granted, [it] is still required to show, at a minimum, 

‘serious questions going to the merits.’” Mich. Coal. of 

Radioactive Material Users, 945 F.2d at 153–54 (quoting In 

re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir. 

1985)).

Our dissenting colleague criticizes the “sliding-scale” 

approach as “fail[ing] to honor” Third Circuit precedent. 

Dissenting Op. 1. In her view, there is no balancing—a 

court’s consideration of a stay request is an all-or-nothing 

proposition. To merit a stay, she believes, the stay applicant 
23

must “demonstrate,” id., that it will “satisfy,” id. at 3, each of 

the four stay factors. If it doesn’t, then, even if the stay 

applicant’s chances of success on appeal are assured (let 

alone more probable than not) and the applicant will likely 

suffer an irreparable injury, a stay must be denied if, for 

example, it isn’t in the public interest. That approach is not 

only impractical, it has the potential to be deeply unfair, and 

is one we have explicitly disavowed. In Delaware River Port 

Authority v. Transamerican Trailer Transport, for example, 

we couldn’t have been clearer in establishing that 

“consideration of [the four] factors by the district court 

requires a ‘delicate balancing.’” 501 F.2d at 920. We 

reaffirmed that concept in Kreps in observing that “no one 

aspect” of the stay analysis “will necessarily determine its 

outcome,” 573 F.2d at 815, assuming, we pause to note, that 

the party seeking a stay has made a sufficient showing on the 

first two factors. Therefore, where the balance of harms and 

public interest “strongly favor[]” a stay, a court may enter it 

even if the applicant didn’t “demonstrate as strong a 

likelihood of ultimate success as would generally be 

required.” Del. River Port Auth., 501 F.2d at 923. Relatedly, 

“when considerable injury will result from either the grant or 

denial of a preliminary injunction, these factors [i.e., the 

balance of harms] to some extent cancel each other and 

greater significance must be placed upon the likelihood that 

each party will ultimately succeed on the merits of the 

litigation.” Id. at 924. To the extent later statements in our 

opinions suggest the opposite—that “a complete failure to 

satisfy any one of [the stay] factors precludes a stay,” 

Dissenting Op. 2—they are not binding. See United States v. 

Rivera, 365 F.3d 213, 213 (3d Cir. 2004) (“This Circuit has 

long held that if its cases conflict, the earlier is the controlling 

authority and the latter is ineffective as precedents.”). 

To sum up, all four stay factors are interconnected, and 

thus the analysis should proceed as follows. Did the applicant 
24

make a sufficient showing that (a) it can win on the merits 

(significantly better than negligible but not greater than 50%) 

and (b) will suffer irreparable harm absent a stay? If it 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.” In re Forty-Eight Insulations, 115 

F.3d at 1300–01 (internal citation omitted). But depending on 

how strong a case the stay movant has on the merits, a stay is 

permissible even if the balance of harms and public interest 

weigh against holding a ruling in abeyance pending appeal. 

B. Application

Because our assessment of how strong a case IDEA 

has is closely linked to the outcome of the balancing test, we 

begin with the test itself (though we write from the back-end 

first): the stronger the balance of harms and public interest is 

in IDEA’s favor, the less a showing of potential success on 

appeal we demand (keeping in mind that the likelihood of 

success must be at least “a substantial case on the merits,” 

Hilton, 481 U.S. at 778); the lesser the harms, the showing of 

success must be stronger. 

1. Whom does the balance of harms and public 

interest favor? 

To establish irreparable harm, a stay movant “must 

demonstrate an injury that is neither remote nor speculative, 

but actual and imminent.” Tucker Anthony Realty Corp. v. 

Schlesinger, 888 F.2d 969, 975 (2d Cir. 1989) (internal 

quotation marks omitted). “The possibility that adequate 

compensatory or other corrective relief will be available at a 

later date, in the ordinary course of litigation, weighs heavily 
25

against a claim of irreparable harm.” Sampson v. Murray, 

415 U.S. 61, 90 (1974) (internal quotation marks omitted); 

see also Gotanda, supra, at 814 (defining “irreparable injury” 

as “the harm [] the movant will suffer during the pendency of 

the litigation that cannot be prevented or fully rectified by the 

tribunal’s final decision”). 

IDEA asserts that, absent a stay, its appeal will be 

batted out of court by § 363(m), rendering the continued 

operation of its business at the Casino impossible. As to 

potential money damages, IDEA continues, the most it will 

receive is pennies on the dollar, which grossly undervalues its 

lease (and the millions it invested in reliance of it). See IDEA 

Br. 41 (arguing that “a money judgment will not compensate 

[it] for [the] loss of its possessory rights under §[]365(h) 

because [Revel] [is] insolvent and, as a result, [has] no ability 

to provide payment on any claim [IDEA] may have”). For its 

part, Revel responds that IDEA’s argument rests on a flawed 

assumption: that continued possession is substantially more 

valuable than the rejection damages it would receive. 

According to Revel (and the District Court), because Polo 

North would likely walk away from the sale if it were stayed, 

IDEA would be left with nothing but a possessory interest in 

a vacant building. See In re Revel, 525 B.R. at 32 (“[I]t is 

entirely logical that the absence of any occupant in the [] 

[C]asino would leave [IDEA] with, in essence, a possessory 

right in an empty and commercially-unproductive building.”). 

We do not accept that assertion. First, there is nothing 

in the record to refute IDEA’s contention that it can operate 

independently of the Casino. Indeed, a principal purpose of 

its lawsuit against Revel was to confirm IDEA’s right of 

access to a power source so that it can begin running its 

business again. See Oral Arg. Tr. 85:4–7 (noting that IDEA 

needed a utility easement “to continue to operate and work 

with the utility company”). We thus deem unsupportable the 
26

suggestion of the District Court that, if Polo North walked 

away, IDEA would be left with “a possessory right in an 

empty and commercially-unproductive building.” In re 

Revel, 525 B.R. at 32. 

That still leaves us with the lingering question of 

whether rejection damages would sufficiently compensate 

IDEA for the loss of possession (and its business). On that 

question, we have previously observed that, though “a purely 

economic injury, compensable in money, cannot satisfy the 

irreparable injury requirement ... an exception exists where 

the potential economic loss is so great as to threaten the 

existence of the movant’s business.” Minard Run Oil Co. v. 

U.S. Forest Serv., 670 F.3d 236, 255 (3d Cir. 2011) (citation 

and internal quotation marks omitted). That exception applies 

here. If we deny the stay, IDEA will lose not only its multimillion dollar investment but also the opportunity to operate 

what was, until the Casino closed, a profitable business. See 

Oral Arg. Tr. 100:12–18. In this context, IDEA shows 

sufficient irreparable injury to it absent a stay. Thus we turn 

to the harm to Revel (the only party who opposed IDEA’s 

request for a stay)10 and the public interest (the latter, in 

essence, balances the benefits and harms to the public if a 

stay is imposed and if it is not). 

In assessing this side of the balance, the District Court 

credited Revel’s “position that the issuance of [a] stay would 

present ‘a real and substantial risk that Polo North would 

elect not to proceed with closing.’” In re Revel, 525 B.R. at 

 

10

 Polo North, though obviously having an interest in the 

outcome, took no significant role in advocating for or against 

a stay, and neither the Bankruptcy Court nor the District 

Court suggested that denying a stay would harm it, let alone 

cause irreparable harm. 
27

32. As it does on appeal, Revel’s counsel had argued that 

even a limited stay would trigger bad things: Polo North 

walking away and Revel having to liquidate its assets under 

Chapter 7, which “not only would cause the permanent loss of 

approximately 4,000 jobs the [Casino] once provided, but 

also could cause substantial detriment to the City of Atlantic 

City and the surrounding areas, and possibly further hamper 

reorganization efforts at other casino resorts located in the 

city.” Revel Br. 50. 

In our view, the adequacy of the proof provided plays 

an important role “[i]n evaluating the harm that will occur 

depending upon whether or not [a] stay is granted.” Mich. 

Coal. of Radioactive Material Users, 945 F.2d at 154. 

Absent some sort of declaration or other evidence in the 

record that a stay would cause substantial harm, the harm to 

Revel was at best speculative. Note the context: Revel’s 

counsel told the District Court that granting IDEA a stay only 

to prevent its lease from being extinguished would 

nonetheless spoil the entire sale.11 On the other hand, if 

IDEA lost its lease—a result a stay denial virtually 

guaranteed—its business at Revel’s site would be 

permanently shuttered. As a result, at the time of our ruling 

in February, the balance-of-harms tilted (at least moderately) 

in favor of IDEA. 

 

11

 As it turns out, a limited stay didn’t set off the 

consequences Revel and Polo North said it would. 

Notwithstanding the limited stay we put into place on 

February 6, 2015, Revel and Polo North closed two months 

later on April 7. See Notice of Sale Closing, In re Revel AC, 

Inc., No. 14-22654 (Bankr. D.N.J. Apr. 7, 2015), ECF No. 

1553. 
28

Does the public interest move the needle? We have 

doubts that it moves much. While the public certainly has an 

interest in saving jobs and helping Atlantic City’s often 

sullied reputation, nothing before us indicates how many jobs 

will be brought back of the 4,000 lost, as we were not told 

what use Polo North intended for the sold assets. On the 

other side, the public has a stake in protecting the rights of 

tenants in commercial properties. Furthermore, public policy 

strongly favors the correct application of the Bankruptcy 

Code, especially where property rights are at stake. Overall, 

though the public has an interest in preventing both outcomes, 

we ultimately believe the short-term gain of some jobs in a 

facility that is operational in some way tilts slightly in Revel’s 

favor. 

In any event, our ultimate conclusion need not rest 

primarily on a rough estimation of whom the balance of 

harms and public interest favor. For, along with IDEA’s 

sufficient showing of irreparable harm to it should a stay not 

be granted, success to it on the merits was assured. We 

explain why below. 

2. Has IDEA made a strong showing of its 

likelihood of success on the merits?

IDEA makes three arguments before us on the merits, 

but we need address only one: whether the Bankruptcy and 

District Courts erred in holding that Revel met one of 

§ 363(f)’s statutorily enumerated conditions to sell its assets 

free and clear. Revel contends they didn’t err because IDEA 

twice sought to establish (via declaratory judgment actions) 

that it held a non-residential lease and Revel denied that 

IDEA had a lease. In Revel’s view, this proves that a bona 

fide dispute exists under § 363(f)(4), as “a declaratory 

judgment is only proper when an actual ‘case or controversy’ 

exists.” Revel Br. 34. We disagree yet again. 
29

As an initial matter, the mere filing of a declaratory 

judgment action doesn’t itself create a bona fide dispute under 

§ 363(f)(4), even if Article III’s “case or controversy” 

requirement has been met. The latter ensures only that the 

declaratory judgment plaintiff has standing and a redressable 

injury. Further, that IDEA alleged (and Revel denied) the 

former held a non-residential lease doesn’t mean there was a 

bona fide dispute as to the validity of its lease. “Bona fide 

dispute” in the § 363(f)(4) context means that there is an 

objective basis—either in law or fact—to cast doubt on the 

validity of IDEA’s purported lease. To satisfy that provision, 

Revel needed to show there was some factual or legal basis to 

deny that IDEA held a “true lease.” But it did nothing of the 

sort. 

First, a review of IDEA’s complaint makes plain that 

its principal (and only) purpose was to invoke its rights under 

§ 365(h) and “clarify its appurtenant rights for,” among other 

things, “a utility easement,” not to litigate the nature of its 

interest. Reply Br. 6; see also Oral Arg. Tr. 15:14–15 

(counsel for IDEA noting that its suit was meant only to have 

the Court “declare and enforce [IDEA’s] [] rights” under § 

365(h)). The relevant paragraphs alleged the following:

125. [O]n or about May 12, 2012, [Revel] 

and IDEA . . . entered into a lease for 

nonresidential real property concerning certain 

premises at the Casino.

126. On August 28, 2014, [Revel] filed the 

Rejection Motion.

127. A hearing on the Rejection Motion is 

currently scheduled for October[]7, 2014.
30

128. If the Rejection Motion is granted, 

IDEA will have an opportunity to make an 

election under Section 365(h) of the 

Bankruptcy Code.

129. Section 365(h) . . . provides a lessee of 

real property under a rejected lease with the 

option of either retaining the estate, including, 

among other things, the continued right to 

possession or to treat the lease as terminated.

130. To the extent that IDEA elects to remain 

in possession, § 365(h) . . . allows it, despite 

rejection, to continue to enjoy its rights under 

such lease that are in or appurtenant to the real 

property, including the right to continued 

possession, utilities and necessary easements.

Wherefore, [] IDEA seeks an order and judgment as 

follows:

a. Declaring that, despite rejection of the 

Lease, . . . IDEA may continue to enjoy its 

right under the Lease, including the right 

to continued possession, utility service and 

necessary easements; and

b. Granting such other relief as is just. 

Reply Br. 5–6 (emphasis omitted) (quoting Am. Compl. ¶¶ 

125–30, IDEA Boardwalk, LLC v. Revel Entm’t Grp., LLC, 

No. 14-01756 (Bankr. D.N.J. Sept. 26, 2014), ECF No. 6). 

Moreover, even if IDEA had squarely put the validity 

of its lease at issue, nothing Revel said in response created an 

objective legal dispute. Revel’s only argument was that its 

agreement with IDEA doesn’t qualify as “a true lease” 
31

because it “provides for ‘rent’ payments based entirely on a 

percentage of the revenue derived from [IDEA’s operations]” 

and contains “numerous [] examples of provisions atypical of 

true leases.” Mot. to Dismiss ¶ 31, IDEA Boardwalk, LLC v. 

Revel Entm’t Grp., LLC, No. 14-01756 (Bankr. D.N.J. Oct. 

13, 2014), ECF No. 8. Yet Revel failed to cite a single 

authority suggesting that a percentage-lease clause 

disqualifies a purported lease from being one. 

To leave no doubt that a true lease exists, IDEA’s 

agreement with Revel bars any argument to the contrary. It 

provides that

[n]othing contained in this Lease shall be 

deemed or construed as creating the relationship 

of . . . partnership or joint venture between the 

parties hereto, it being understood and agreed 

that neither the method of computing rent, 

payment of the Tenant Fees nor any other 

provision contained herein nor any acts of the 

parties hereto shall be deemed to create any 

relationship between the parties other than that 

of Landlord and Tenant. The provisions of this

Lease relating to the Percentage Rent payable 

hereunder are included solely for the purpose of 

providing a method whereby adequate rent is to 

be measured and ascertained.

Mot. to Dismiss Ex. A, at 56, IDEA Boardwalk, LLC v. Revel 

Entm’t Grp., LLC, No. 14-01756 (Bankr. D.N.J. Oct. 13, 

2014) (Section 21.12 of the Lease Agreement), ECF No. 8. 

The only conclusion from this is that any dispute regarding 

the validity of IDEA’s lease was fanciful if not 
32

disingenuous.12 As such, we part ways with the District 

Court’s holding that IDEA’s declaratory judgment request 

“provides some objective basis, at a minimum,” of a “bona 

fide issue in dispute.” In re Revel, 525 B.R. at 29. 

Before we conclude, we would be remiss if we did not 

highlight the troubling consequences of Revel’s argument. If 

whenever a lessee attempts to invoke its rights under § 365(h) 

by asserting as a predicate that it holds a nonresidential lease, 

 

12

 Underscoring this is that, on June 24, 2015, the 

Bankruptcy Court, per another Judge, concluded that Revel’s

agreement with IDEA constitutes a “true lease” under New 

Jersey law and that § 365(h) protects its right “to remain in 

possession for the balance of the terms set forth in the 

Agreement[], and any renewal or extension period.” In re 

Revel AC, Inc., 532 B.R. 216, 227, 229 (Bankr. D.N.J. 2015). 

As to whether the agreement was a true lease, the Court said 

the following:

[Polo North] places before the Court ample case 

law supporting the contention that a court must 

not be swayed by “form over substance” when 

determining the existence of a true lease. While 

this maxim is accurate, at some point form 

becomes substance. We have reached that 

point. The express terms of the Agreement[], 

together with supporting affidavits, make it 

clear that [Revel] and [IDEA] had the 

unequivocal intention of entering into true lease 

agreements. 

Id. at 226.
33

every debtor would be well advised to file an answer denying 

that the lease exists. Revel’s only response is that, by filing a 

declaratory judgment action, IDEA is “affirmatively alleging, 

subject to Rule 11, that there is a dispute as to that issue,” as 

there needs to be “an actual case or controversy” in order to 

have a declaratory judgment action. Oral Arg. Tr. 70:10–17. 

That argument makes no sense. A declaratory judgment 

plaintiff does not fall afoul of Rule 11 by making an 

allegation in its complaint that it knows to be true. That rule 

comes into play only where a plaintiff files a complaint 

without basis in law or fact. Quite the opposite is what we 

have here. 

V. Conclusion

The factors favoring a stay weigh solidly with IDEA. 

First, that it would prevail on the merits was all but assured 

because nothing in the record casts doubt on the validity of its 

lease with Revel, thus prohibiting the latter from invoking 

§ 363(f) and selling its assets free of IDEA’s lease. Second, 

IDEA demonstrated that, absent a stay, it would lose its club 

business at the Casino, and this was sufficient to show 

irreparable harm. On the balancing of harms, perhaps Revel 

could have tilted the balance in its favor with its own showing 

of irreparable harm, but it didn’t come close, as it relied only 

on its counsel’s hollow representations of harm rather than 

record evidence. Thus, while the public interest appears to 

favor a stay denial, that alone doesn’t tip the four-factor 

balance in Revel’s favor. We thus reverse and stay only the 

part of the Sale Order that allows Revel to sell the Casino free 

and clear of IDEA’s lease.
1

SHWARTZ, Circuit Judge, dissenting.

Mindful of the deference we owe to the District Court 

under the applicable standard of review and the test for 

obtaining a stay, I part company with the Majority and would 

affirm the District Court’s order denying IDEA’s motion for a 

stay of the sale order pending appeal.

1

 First, I disagree with 

the Majority’s new interpretation of the requirements for 

obtaining a stay. Second, I conclude that the District Court 

thoroughly considered the entire record and all of the relevant

factors and acted within its discretion when it held that the 

requirements to obtain a stay had not been satisfied.2 

The Majority’s “sliding scale” approach for obtaining 

such equitable relief fails to honor our precedent’s 

conjunctive four-part test to obtain a stay and it would permit 

relief to be granted upon a particularly strong showing on just 

a single factor, apparently even if at least one factor weighs 

against the movant. To obtain a stay pending appeal, a 

movant must demonstrate all four of the following elements: 

(1) that it is likely to succeed on the merits; (2) that

irreparable harm will occur in the absence of a stay; (3) that 

granting the stay will not result in greater harm to other 

parties; and (4) that the public interest favors a stay. Hilton v. 

 

1 As we must limit our review to the District Court’s 

decision based on the facts it had before it at the time, I do 

not—and cannot—consider events that arose thereafter.

2 Additionally, I would reach the issue of our 

jurisdiction under 28 U.S.C. § 1292(a)(1) and conclude that 

we do have jurisdiction under that statute. See Jackson v. 

Danberg, 656 F.3d 157, 163 (3d Cir. 2011) (asserting 

appellate jurisdiction over the denial of a stay or injunction).
2

Braunskill, 481 U.S. 770, 776 (1987); Jackson v. Danberg, 

656 F.3d 157, 162 (3d Cir. 2011); Republic of Phil. v. 

Westinghouse Elec. Corp., 949 F.2d 653, 658 (3d Cir. 1991).

Notwithstanding whatever extent to which these factors may 

be “balanced” against one another such that a relatively 

stronger showing on one may excuse a relatively weaker, but 

still extant, showing on another, a complete failure to satisfy 

any one of these factors precludes a stay.3 See, e.g.,

NutraSweet Co. v. Vit-Mar Enters. Inc., 176 F.3d 151, 153 

 

3 The Majority suggests that this Court has endorsed a 

sliding scale approach in Constructors Association of Western 

Pennsylvania v. Kreps, 573 F.2d 811 (3d Cir. 1978) and 

Delaware River Port Authority v. Transamerican Trailer 

Transport, Inc., 501 F.2d 917 (3d Cir. 1974). As noted in the 

text, however, this Court has repeatedly emphasized that all 

four factors must be independently satisfied to justify the 

grant of preliminary equitable relief, and the Supreme Court 

has presented the four-factor test as conjunctive, meaning that 

all four factors must be satisfied to obtain a stay. See, e.g., 

Hilton, 481 U.S. at 776. Further, even to the extent that these 

cases can be read to embrace a “sliding scale” or “balancing” 

approach (which I do not necessarily view as equivalent), 

neither states or implies that a movant’s complete failure to 

satisfy any of the four factors can be excused. See Kreps, 573 

F.2d at 815 (suggesting an injunction might be appropriate 

even where the movant “did not demonstrate as strong a 

likelihood of ultimate success as would generally be 

required” if each of the other factors “strongly favor[s] the 

moving party” (emphasis added)). In my view, an essential 

prerequisite to “balancing” the factors is the requirement that 

proof of each factor be presented and hence can be placed on 

the scale.
3

(3d Cir. 1999) (“A plaintiff’s failure to establish any element 

in its favor renders a preliminary injunction inappropriate.”); 

Opticians Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d 

187, 192 (3d Cir. 1990) (“Only if the movant produces 

evidence sufficient to convince the trial judge that all four 

factors favor preliminary relief should the injunction issue.”);

ECRI v. McGraw-Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987) 

(vacating preliminary injunction based on “dispositive” 

failure to satisfy one of the four factors).

Contrary to the Majority’s assertion, requiring a 

movant to satisfy each factor is not unfair. Indeed, it is 

warranted. Equitable relief, including injunctions and stays, 

is an extraordinary remedy, Winter v. Natural Res. Def.

Council, Inc., 555 U.S. 7, 24 (2008), and movants must 

accordingly meet a high bar to obtain it. Here, that means the 

movant must satisfy all four requirements to obtain a stay. 

See N.J. Hosp. Ass’n v. Waldman, 73 F.3d 509, 512-13 (3d 

Cir. 1995) (stating that an “injunction shall issue only if the 

plaintiff produces sufficient evidence to convince the district 

court that all four factors favor preliminary relief” (quoting 

Merchant & Evans, Inc. v. Roosevelt Bldg. Prods., 963 F.2d 

628, 632-33 (3d Cir. 1992)). The Majority’s test weakens this 

conjunctive test and makes it possible to, for example, obtain

a stay or injunction simply because a party has made a strong 

showing on the merits, even though the harm that may befall 

it is compensable with money. This possibility is contrary to 

our precedent, which also requires an applicant seeking 

injunctive relief to show irreparable harm. Frank’s GMC

Truck Center, Inc. v. Gen. Motors Corp., 847 F.2d 100, 102

& n.3 (3d Cir. 1987). Thus, the Majority’s approach makes it 

more likely that what should be an extraordinary remedy will 
4

be afforded on a more ordinary basis.4 For these reasons, we 

should not adopt the Majority’s version of the sliding scale 

approach insofar as it excuses total failure to satisfy any one 

of the four factors, and we should continue to apply the fourfactor test entrenched in binding precedent. If proof of each 

factor is adduced, then a district court can and should 

carefully consider each factor, accord each the weight it 

believes appropriate in the particular case, and determine 

whether, on balance, the extraordinary relief sought should be 

granted.

That is exactly what the District Court did here. The 

District Court carefully considered each of the factors and did 

not abuse its discretion in determining that none were 

satisfied. First, the District Court astutely acknowledged that 

if the sale proceeded, IDEA would be no worse off than it 

was at the time it made its request for relief. It was not 

clearly erroneous for the District Court to find, based on the 

facts before it, that IDEA was not conducting any business 

because Revel was closed, and that IDEA would be unable to 

conduct business if the sale fell through and Revel remained 

closed.

5

 It also was not clearly erroneous for the District 

Court to surmise that IDEA would likely not reopen its 

business if the sale proceeded, and thus that allowing the sale 

to proceed would cause it no additional harm. Moreover, any 

 

4

In fact, in this case, the Majority granted a stay even 

though it concluded that the public interest factor favored the 

non-movant, and thus the four-factor test was not met.

5 The analysis might be different if the facility was

accessible and the lessee was operating, in which case a sale 

free and clear of its interest could disrupt its business. This, 

however, is not the case here.
5

injury to IDEA would be compensable with money.6 While 

collection may prove challenging, this hurdle is no different 

from that facing any other unsecured creditor.

Second, it was not clearly erroneous for the District 

Court to conclude that staying the sale would likely cause 

greater harm to others, including the estate and other 

creditors. Each month without a sale generated millions of 

dollars in carrying costs to maintain the closed facility. These 

expenditures depleted Revel’s assets and the District Court 

correctly observed that a prompt sale would end these 

expenditures. Moreover, the sale would provide an

immediate opportunity to obtain assets for the estate, which it

could then use to begin to repay its creditors. Thus, it was 

reasonable for the District Court to conclude that a prompt 

sale would both preserve existing and generate additional 

estate assets, whereas staying the sale would continue to 

dissipate estate funds and, at a minimum, delay the collection 

of additional assets. Given Revel’s substantial challenges in 

finding a prospective buyer, it was far from idle speculation 

for Revel to fear that the loss of this buyer would significantly 

delay its ability to satisfy its creditors. For these reasons, the 

District Court acted within its discretion in denying the stay,

 

6

I recognize that, in exceptional circumstances, 

economic loss that threatens a movant’s business can 

constitute irreparable harm sufficient to enjoin an action that 

poses such a threat, Minard Run Oil Co. v. U.S. Forest Serv., 

670 F.3d 236, 255 (3d Cir. 2012), but no evidence was 

presented to show that the sale will cause such a loss. This is 

not surprising because it was Revel’s closing, and not its sale,

that caused IDEA’s inability to operate. 
6

as a stay would likely cause greater harm to others than the 

absence of a stay would cause IDEA.7

Third, the District Court had a sound basis to conclude 

that granting the stay would not be in the public interest. As 

stated above, Revel faced difficulties securing a buyer, and 

having one in hand would certainly serve the public interest. 

At the time, it appeared that allowing the sale to proceed 

quickly would lead to the reopening of a large facility, which 

had employed (and would likely again employ) thousands of 

people. Thus, as even the Majority concedes, the sale 

presented the opportunity for numerous jobs in an 

economically depressed community. The District Court thus 

did not err in finding that denying the stay is in the public 

interest. 

Finally, although the preceding analysis makes it

unnecessary to reach this factor, I would hold that the District 

Court also appropriately concluded that IDEA did not 

demonstrate a strong likelihood of success on the merits, 

notwithstanding the Majority’s assertion that success on the 

merits was “all but assured.” Since the Majority has focused 

only on IDEA’s argument that the Bankruptcy Court erred in 

 

7 Moreover, granting IDEA a stay would allow it to 

interfere with the orderly collection and distribution of assets 

and impact other creditors. IDEA is an unsecured creditor 

and, in the normal course, would have to await satisfaction of 

obligations to the secured creditors before it could be 

compensated. The stay would enable IDEA to catapult ahead 

of all other creditors, and place itself in a position to demand 

satisfaction before them.
7

holding that Revel met one of 11 U.S.C. § 363(f)’s conditions 

to sell its assets free and clear of IDEA’s lease, I will likewise 

focus on this issue. 

Under 11 U.S.C. § 363(e), an entity with “an interest 

in property” that is proposed to be sold can request the 

bankruptcy court to “prohibit or condition such . . . sale . . . as

is necessary to provide adequate protection of such interest.” 

11 U.S.C. § 363(e). The trustee, however, may sell the 

property “free and clear” if, among other things, “such 

interest is in bona fide dispute.” 11 U.S.C. § 363(f)(4). The 

issue before the District Court was whether the record before 

it supported a finding that there was a bona fide dispute about 

whether IDEA had a leasehold interest in the space it 

occupied at Revel.

The Majority discounts the propriety of relying on 

IDEA’s request for a declaratory judgment that it had a 

nonresidential lease as reflecting a bona fide dispute. While 

requesting a declaratory judgment alone does not 

automatically mean a bona fide dispute exists, the District 

Court here acted within its discretion to find a bona fide 

dispute existed based on the pleadings and the declaratory 

judgment IDEA sought. A declaratory judgment action asks 

a court to “declare the rights and other legal relations of any 

interested party seeking such declaration, whether or not 

further relief is or could be sought.” 28 U.S.C. § 2201(a).

When determining whether to exercise jurisdiction under § 

2201, a district court is to consider, among other things, “the 

likelihood that a federal court declaration will resolve the 

uncertainty of obligation which gave rise to the controversy.”

Reifer v. Westport Ins. Corp., 751 F.3d 129, 140 (3d Cir. 

2014) (internal quotation marks omitted). Thus, it is fair to 
8

infer that, if a party seeks a declaratory judgment, it believes 

there is a dispute about a matter regarding which it seeks 

certainty. Here, IDEA wanted to secure relief under § 363(e). 

To do so, it needed a property interest. Aware that Revel may 

attempt to characterize IDEA’s interest as a management 

agreement or partnership rather than a leasehold interest, it 

sought court intervention. These events provided the District 

Court with sufficient grounds to find that there was a strong 

likelihood that Revel would establish that there was a bona 

fide dispute about IDEA’s interest in the property. While the 

Majority questions whether the dispute was indeed bona fide 

based upon the language of the lease agreement (and the 

Bankruptcy Court’s finding months later concerning the 

lease), I cannot say that the District Court abused its 

discretion in relying on IDEA’s own pleadings, which 

arguably conveyed its concern that Revel may dispute its 

interest.8

 For these reasons, the District Court appropriately 

found that IDEA failed to satisfy any of the requirements 

needed to obtain a stay, and I would affirm the District 

Court’s order denying the motion to stay the sale pending 

appeal.

 

8 The Majority also notes that the Bankruptcy Court 

did not make explicit findings concerning the conditions 

needed to adequately protect IDEA’s possessory interest. 

Even assuming that its analysis lacked precision, this alone 

does not mean that the District Court abused its discretion in 

denying the stay.