DALE L. SOMERS, Bankruptcy Judge.
Following argument, the Court took under advisement the Motion of Rose Hill Bank (Rose Hill) to Disburse Funds from Court Registry (Motion). The Motion seeks the release of funds in the Court registry that were deposited as a bond securing a stay pending appeal of this Court's order awarding attorney fees and expenses to Debtor's counsel, Mark J. Lazzo, P.A. (Lazzo). Lazzo opposes the Motion. Having considered relevant prior proceedings and the arguments and briefs of Rose Hill and Lazzo, the Court is ready to rule. For the reasons stated below, the Court grants the Motion and orders that $11,675.91 of the bond money, plus accrued interest less a pro-rata share of the Clerk's administrative fee, if any, be distributed to Lazzo, and the remaining balance of the bond money, plus accrued interest less a pro-rata share of the Clerk's administrative fee, if any, be released to Carl B. Davis, the Liquidating Trustee (Trustee) pursuant to the Confirmed Chapter 11 Plan in this case.
A creditors' Chapter 11 Plan of liquidation for Debtor was confirmed on November 21, 2012. The order confirming the plan provided generally for the establishment of a liquidating trust which, among other things, became responsible for the payment of certain administrative expenses, including Debtor's attorney fees.
Rose Hill and the Trustee appealed the award of Lazzo's fees and expenses to the Bankruptcy Appellate Panel for the Tenth Circuit (BAP), and Rose Hill moved for a stay pending appeal on behalf of itself and the Trustee.
On November 25, 2014, the BAP issued its opinion affirming in part and reversing in part,
Rose Hill's Motion was filed on December 2, 2015.
Resolution of this dispute depends upon whether the stay order issued by this Court in conjunction with the notice of appeal to the BAP that was filed by Rose Hill and the Trustee remains effective after the issuance of the Tenth Circuit's mandate affirming the BAP. If the stay is not effective, there is no basis to hold the bond funds. The Court finds that the order did not stay proceedings other than during the appeal to the BAP, and therefore the bond funds should be disbursed even though Lazzo is seeking a writ of certiorari.
There are generally three levels of appeal for a bankruptcy court order. The first is to the BAP or the district court, the second is to the court of appeals, and the third is to the United States Supreme Court. At each level, the procedure for obtaining a stay is similar. A motion for a stay must initially be made to the court issuing the order which has been appealed. If that court denies the motion, the reviewing court may grant a stay. But there is no procedure for the bankruptcy court to stay the order of any appellate court, whether that is the BAP, the district court, or the circuit court. The stay of a bankruptcy court judgment pending appeal is governed by Rule 8007(a).
Based upon these authorities, the Court concludes that its stay order was effective only until the BAP disposed of the appeal by Rose Hill and the Trustee. Since then, there has been no stay. Lazzo did not request a stay pending his appeal from the BAP to the Tenth Circuit or after the Tenth Circuit affirmed the BAP. Section "2101(f) contemplates enforcement of the court of appeals' judgment, even during the certiorari process, if no stay is obtained."
The Motion requests an order disbursing the bond funds as follows: $11,658.88 plus pro-rata interest (less pro-rata administrative fee) to Lazzo and the balance of $35,780.94, plus pro-rata interest (less pro-rata administrative fee) to "the Trustee and/or[Rose Hill] as may be designated between them."
First, the Court finds that the amount owed to Lazzo for unpaid fees and expenses is $11,675.91 rather than $11,658.88. This is the difference between $37,951.86, the balance found owing to Lazzo in this Court's order allowing his administrative claim, and $26,275.95, the amount which the appellate courts found was erroneously allowed. The remaining balance of the bond funds is therefore $35,763.91, rather than the $35,780.94 stated by Rose Hill.
Second, Rose Hill provides no explanation supporting distribution of this balance to it or as agreed between it and the Trustee. The balance is greater than the amount deposited into the bond account by Rose Hill, apparently making the other six creditors solely liable for Lazzo's fees and expenses, even though it appears that they paid the Trustee the funds he requested, perhaps enabling him to deposit $14,289.41 to the bond account. Rather than granting the requested relief, the Court orders that the net funds in the bond account, plus accrued interest, after paying Lazzo $11,675.91, plus interest (less a pro-rata share of any administrative fee), and deducting a pro-rata share of any administrative fee, be distributed to the Trustee for administration in accord with the confirmed plan, giving due consideration to the source of the funds and the remaining administrative expenses.
For the foregoing reasons, the Court grants the Motion to disburse $11,675.91 of the bond funds, plus interest (less a pro-rata share of any administrative fee) to Lazzo, and the remaining balance of the funds in the bond account to the Trustee.