Opinion ID: 2929108
Heading Depth: 2
Heading Rank: 5

Heading: The Government’s Appeal and Stay Request

Text: The Government appealed from both the sale order and the Court’s approval of the Settlement and sought to stay the effect of those decisions. At the stay hearing, the Government made clear its intent was not to stop the sale but to alter the part of the sale order that provides for the payment of professional fees and wind-down expenses. Likewise, it argued that the distributional terms of the Settlement Agreement should be modified to follow the Code’s paymentpriority scheme. But the Court again disagreed with the Discrimination in Chapter 11, 72 Am. Bankr. L.J. 227, 22829, 231 (1998)—junior creditors do not receive distributions under plans of reorganization until more senior creditors, unless they consent, are paid or allocated value in full. See 11 U.S.C. § 1129(b). This is distinguished from “horizontal equity,” Markell, supra, at 227-28, 231, whereby creditors of the same priority rank receive proportionally equal distributions of estate property. See 11 U.S.C. §§ 1122(a), 1123(a)(4), 1129(b)(1) (each to the extent they concern unfair discrimination); see also Ralph Brubaker & Charles Jordan Tabb, Bankruptcy Reorganizations and the Troubling Legacy of Chrysler and GM, 2010 U. Ill. L. Rev. 1375, 1403. 11 Government’s assessment and denied its stay request. See June 11, 2013 Hr’g Tr. at 34:9-12 (noting that there was nothing in the record on which to “base a finding that the funds being held, in effect, in trust for other creditors, for other parties and specifically pursuant to a contract, . . . are [] property of the estate”). The Government appealed the denial of its request for a stay to the District Court. But it too thought the Government had a weak case on the merits, agreeing with the Bankruptcy Court that the funds at issue were not property of the estate and thus not subject to the Code’s distribution rules. See App. at 11 (deferring to the Bankruptcy Court’s ruling, which was based on “a voluminous and uncontested record supplemented by the argument and testimony presented at several hearings . . . that the sale was warranted and the funds at issue belonged to the purchaser [and] not the estate”). Thus the District Court denied the stay request, concluding that the Government didn’t make the threshold showing of a sufficient likelihood of success on the merits. The Government appeals the approval of both the sale order and the Settlement. We have jurisdiction under 28 U.S.C. § 158(d) and 28 U.S.C. § 1291.