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In re Kenny G. Enterprises, LLC

United States District Court, C.D. California

May 7, 2014

IN RE KENNY G. ENTERPRISES, LLC, Debtor.
v.
DOUGLAS ROTENBERG; TUONG-VY TON, Appellants. THOMAS H. CASEY, Appellee,

ORDER DENYING EMERGENCY MOTION TO STAY THE ADVERSARY PROCEEDING PENDING INTERLOCUTORY APPEAL [12]

OTIS D. WRIGHT, II, District Judge.

I. INTRODUCTION

After this Court granted Appellants Douglas Rotenberg and Tuong-Vy Ton's ("the Rotenbergs") leave to file an interlocutory appeal of a bankruptcy order, they promptly filed a motion to stay before the Central District of California Bankruptcy Court. When the court denied that motion, the Rotenbergs filed this Emergency Motion to Stay under Bankruptcy Rule 8005. The Court then set a hearing and expedited briefing schedule. After considering the parties' written and oral submissions, the Court finds that the Rotenbergs have failed to demonstrate that they will suffer irreparable harm absent a stay. The Court accordingly DENIES the Rotenbergs' Emergency Motion to Stay. (ECF No. 12.)

II. PROCEDURAL HISTORY

On March 6, 2014, the Court granted the Rotenbergs leave to file an interlocutory appeal of the Central District of California Bankruptcy Court's order denying their motion to dismiss the Trustee's Complaint. (ECF No. 4.) The Court specifically limited the issue on appeal to whether 11 U.S.C. ยง 544(b) applies to postpetition transfers. The Rotenbergs' opening brief is due on May 14, 2014. (ECF No. 11.)

On March 10, 2014, the Rotenbergs filed an emergency motion to stay the adversary bankruptcy proceedings before the bankruptcy court. On March 18, 2014, the bankruptcy court issued a tentative ruling indicating various reasons for denying the stay. (Request for Judicial Notice ("RJN") Ex. G.)[1] The court held a hearing on the matter and ultimately denied the motion. ( Id. Ex. I.)

On April 30, 2014, the Rotenbergs filed an Emergency Motion to Stay before this Court. The Court promptly set an expedited briefing schedule and a hearing. On May 6, 2014, the Court held a hearing on the Motion and took the matter under submission. That Motion is now before the Court for decision.

III. LEGAL STANDARD

Bankruptcy Rule 8005 provides that a bankruptcy court may stay a case pending the outcome of an appeal or make other appropriate orders to protect the interests of the parties involved. A party seeking a stay must generally file the motion with the bankruptcy court first before seeking relief from a district court. Fed.R.Bankr.P. 8005.

A stay is not a matter of right-"even if irreparable injury might otherwise result." Nken v. Holder, 556 U.S. 418, 433 (2009). Rather, a stay is an exercise of judicial discretion. Id. A movant must generally satisfy four elements: "(1) appellant is likely to succeed on the merits of the appeal; (2) appellant will suffer irreparable injury; (3) no substantial harm will come to appellee; and (4) the stay will do no harm to the public interest." In re Irwin, 338 B.R. 839, 843 (E.D. Cal. 2006) (internal quotation marks omitted). But the first two factors are the most important. Nken, 556 U.S. at 434.

After a bankruptcy court denies a motion to stay, the district court may only review the denial for abuse of discretion. Id. at 847. The district court reviews the bankruptcy court's legal determinations de novo but may only set aside factual findings if clearly erroneous. Id. at 848.

IV. DISCUSSION

The Court agrees with the bankruptcy court that the Rotenbergs have not established that they will suffer irreparable harm absent a stay, thus precluding this Court ...


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