IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

FOREST OAKS, LLC )

 )

v. ) MISC. NO. 10-0010-WS

 )

SPCP, INC., et al. )

ORDER

Forest Oaks, LLC (“Debtor”) has filed in Bankruptcy Court a notice of appeal of

the Bankruptcy Judge’s order granting the Creditor’s motion to dismiss, and of her order

denying the Debtor’s motion to reconsider. (Doc. 1, Exhibit A). In this Court, the Debtor

has filed a motion for stay pending appeal and motion for emergency hearing. (Doc. 1). 

SPCP, Inc. (“Creditor”) has filed an objection. (Doc. 2).

The Debtor owns a shopping center, in which the Creditor holds a secured interest. 

In December 2008, the Debtor filed a Chapter 11 proceeding. In October 2009, the

Bankruptcy Judge held a confirmation hearing on the Debtor’s second amended plan of

reorganization. The Bankruptcy Judge concluded the plan appeared feasible but was

defective because it improperly divided one class in two, apparently in order to ensure

that one impaired class voted to accept the plan, as required by law in order to allow

consideration of the plan for confirmation. (Doc. 2, Exhibit A). 

On December 7, the Creditor moved to dismiss the case; the administrator had

done so in November. On January 11, the day before the hearing on the motions to

dismiss, the Debtor filed a third amended plan of reorganization. The Bankruptcy Judge

rejected the Debtor’s argument that dismissal was inappropriate in the face of the third

amended plan. On January 20, she entered an order granting the motions to dismiss. 

(Doc. 2, Exhibit C). Although no party had requested such relief, the Bankruptcy Judge

enjoined the Debtor from filing another Chapter 11 proceeding for 180 days. (Id.). On

February 2, the Debtor filed a motion to reconsider. (Doc. 2, Exhibit D). On March 5,

the Bankruptcy Judge denied the motion to reconsider. (Id., Exhibit E).

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E.g., Johnson v. United States Department of Agriculture, 734 F.2d 774, 789 (11th

Cir. 1984); Wonderland Shopping Center Venture Limited Partnership v. CDC Mortgage

Capital, Inc., 274 F.3d 1085, 1097 (6th Cir. 2001); O’Hagan v. United States, 86 F.3d

776, 783 (8th Cir. 1996); In re: Country Squire Associates, L.P., 203 B.R. 182, 183 (2nd

Cir. B.A.P. 1996); Sharma v. Provident Funding Associates, LP, 2010 WL 143473 at *1

(N.D. Cal. 2010); Bond v. Home Equity Mortgage Corp., 2008 WL 2561947 at *1 (S.D.

Fla. 2008); In re: Thomas, 2007 WL 1192032 at *8 (Bankr. N.D. Ala. 2007); In re:

Skinner, 202 B.R. 867, 869 (W.D. Va. 1996).

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Meanwhile, the Creditor seized the opportunity provided by the January 20 order

and arranged a foreclosure sale of the property for March 17. On March 12, the Debtor

filed both a notice of appeal and a motion for stay pending appeal. On March 15, the

Bankruptcy Judge conducted a hearing on the motion for stay and denied it. (Doc. 2,

Exhibit F). The same day, the Debtor filed the instant motion. 

Due to the delay inherent in Bankruptcy Rules 8006 and 8007, and the imminence

of tomorrow’s scheduled foreclosure sale, the motion for stay has arrived before the

appeal. The parties suggest no reason this Court, rather than the judge to whom the

appeal will be assigned in due course, should determine the instant motion. 

Courts have frequently indicated, in a variety of contexts, that foreclosure on real

property threatens irreparable harm.1

 Here, the Debtor asserts irreparable harm not

merely from the loss of unique property, and not merely from mooting the appeal, but

from rendering it impossible to present a confirmable plan if the property is sold. (Doc. 1

at 4). The Creditor’s statement of threatened future harm to itself, and its assessment of

the merits of the appeal, are not so impressive as to make clear that a temporary delay in

resolving the motion to stay would be pointless.

The parties agree that the Court’s authority to enter a stay pending appeal is based

on Bankruptcy Rule 8005. The purpose of a stay under that rule is to “preserve the status

quo.” In re: Continental Airlines, 91 F.3d 553, 561-62 (3rd Cir. 1996); accord In re:

Chateaugay Corp., 988 F.2d 322, 326 (2nd Cir. 1993). In order to preserve the status quo

until the appeal is docketed and the assigned judge is given an opportunity to review and

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rule upon the instant motion, the orders of the Bankruptcy Judge from which appeal is

taken are stayed. This stay will remain in effect until an order ruling on the motion for

stay pending appeal is issued, or until the assigned judge otherwise dissolves it.

DONE and ORDERED this 16th day of March, 2010.

s/ WILLIAM H. STEELE

CHIEF UNITED STATES DISTRICT JUDGE 

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