STEPHANI W. HUMRICKHOUSE, Bankruptcy Judge.
The matter before the court is Bank of America's emergency motion for the court to stay its order entered on January 14, 2013 (the "Stay Order"). The Stay Order stayed arbitration initiated by Bank of America against the debtors' guarantors (the "Guarantor Arbitration"). A hearing was held in Raleigh, North Carolina, on January 30, 2013. The court entered an order on January 30, 2013, denying the bank's emergency motion. This order sets forth the reasons for such denial.
Rule 8005 of the Federal Rules of Bankruptcy Procedure enables a party appealing an order of the bankruptcy judge to seek a stay of such order pending appeal. The motion must "ordinarily be presented to the bankruptcy judge in the first instance." Fed. R. Bankr.P. 8005. The judge "may suspend or order the continuation of other proceedings in the case under the Code or make any other appropriate order during the pendency of an appeal on such terms as will protect the rights of all parties in interest." Id.
For the court to issue a stay pending appeal the bank must demonstrate that: (1) it is likely to succeed on the merits of its appeal; (2) it is likely to suffer irreparable harm absent a stay; (3) other parties will not be substantially harmed by a stay; and (4) the public interest will be served by staying the bankruptcy court's order. In re Bannerman Holdings, LLC, 2011 WL 284161, at *1, 2011 U.S. Dist. LEXIS 7573, at *2 (E.D.N.C. Jan. 26, 2011). The following explains why the court is not convinced that Bank of America has satisfied the standard necessary for a stay of the Stay Order pending appeal.
Bank of America contends that it has a substantial likelihood of prevailing on its appeal, generally stating that the court erred because: (1) it lacked jurisdiction and authority to hear and determine the request for relief; (2) the debtors should have been required to initiate an adversary proceeding to obtain the relief requested; (3) the Guarantor Arbitration did not fall within the "unusual circumstances" exception to which the stay under 11 U.S.C. § 362(a)(1) applies; and (4) the court failed to apply the correct legal standard necessary to grant an injunction pursuant to its powers under 11 U.S.C. § 105. For the reasons set forth below, the court finds that Bank of America is not likely to prevail on appeal.
In their motion, the debtors requested an order confirming that the automatic stay applies to the Guarantor Arbitration and granting an injunction pursuant to the court's powers under § 105. The court interpreted this as an initial request to determine whether the automatic stay applied to the Guarantor Arbitration by virtue of the "unusual circumstances" exception recognized by the Fourth Circuit in Piccinin, but if the stay did not apply, then the debtors were requesting that the
Bankruptcy courts have original but not exclusive jurisdiction over every civil proceeding "arising under" the Bankruptcy Code, "arising in" the Bankruptcy Code or "related to" a bankruptcy case. 28 U.S.C. § 1334(b); FPSDA II, LLC v. Larin (In re FPDSA I, LLC), 2012 WL 6681794, at *4, 2012 Bankr.LEXIS 5928, at *15 (Bankr.E.D.N.Y. Dec. 26, 2012). Proceedings "arising under" Title 11 consist of "any causes of action created by Title 11... meaning any matter under which a claim is made under a provision of [T]itle 11[.]" Kraken Inv. Ltd. v. Jacobs (In re Salander-O'Reilly Galleries, LLC), 475 B.R. 9, 27 (2012) (citations and quotations omitted); see also FPSDA II, LLC, 2012 WL 6681794, at *4, 2012 Bankr.LEXIS 5928, at *16 ("[A] civil proceeding is one `arising under' the Bankruptcy Code if it `invokes a substantive right created by the Bankruptcy Code[.]'"). Proceedings "arising in" Title 11 "arise only in bankruptcy cases" and are "matters not based on any right expressly created by Title 11, but that would have no existence outside of the bankruptcy." Kraken Inv. Ltd., 475 B.R. at 27; FPSDA II, LLC, 2012 WL 6681794, at *5, 2012 Bankr.LEXIS 5928, at *16.
The court had "arising under" jurisdiction over the debtors' motion in that it specifically requested an order confirming that the stay under § 362(a)(1) applies to the Guarantor Arbitration. The automatic stay under § 362(a)(1) is exclusive to the Bankruptcy Code. See FPSDA II, LLC, 2012 WL 6681794, at *5, 2012 Bankr.LEXIS 5928, at *16 ("The automatic stay of 11 U.S.C. § 362(a) is found nowhere but in bankruptcy. It is imposed directly by the Bankruptcy Code, which in turn provides the Debtor with the `substantive right' to invoke its protections."). Therefore, whether the automatic stay applies to the Guarantor Arbitration by virtue of the "unusual circumstances" exception falls squarely within the court's "arising under" jurisdiction.
The court also had "arising in" jurisdiction over the debtors' request for an order granting an injunction pursuant to § 105. Even if § 105 cannot form the basis for "arising under" jurisdiction, a § 105 injunction arises only in bankruptcy cases in that such an injunction would have no existence outside of bankruptcy. The debtors would not be entitled to a § 105 injunction but for the existence of their bankruptcy cases. The Second Circuit described the court's jurisdiction over § 105 injunction in the following way:
Manville Corp. v. Equity Sec. Holders Comm. (In re Johns-Manville Corp.), 801 F.2d 60, 64 (2nd Cir.1986); see also FPSDA II, LLC, 2012 WL 6681794, at *5, 2012 Bankr.LEXIS 5928, at *17 ("[C]ommon sense indicates that, if the Court has subject matter jurisdiction over a proceeding to determine the applicability of the automatic stay, then it has jurisdiction over a related motion for preliminary injunctive relief.").
Courts have often found "related to" jurisdiction over non-debtor litigation because the litigation hinders the reorganization process or in some other way affects the administration of the bankruptcy estate.
The Guarantor Arbitration directly affects the administration of the debtors' bankruptcy cases and undermines this court's jurisdiction over the proceedings within these cases in several ways. As the Stay Order provides, "continued prosecution of it [the Guarantor Arbitration] will
The Guarantor Arbitration and the pending Adversary Proceeding overlap significantly. In the Guarantor Arbitration, Bank of America must demonstrate, and the arbitrator must decide, that the debtors were in default on the loan documents. See Arcady Farms Milling Co. v. Wallace, 242 N.C. 686, 689, 89 S.E.2d 413, 415 (1955) ("A guaranty of payment is an absolute promise to pay the debt at maturity, if not paid by the principal debtor."); Gillespie v. De Witt, 53 N.C. App. 252, 280 S.E.2d 736 (1981) ("A guarantor's liability arises at the time of the default of the principal debtor on the obligation or obligations which the guaranty covers."). A major, if not decisive, issue in the Adversary Proceeding is whether a default on the loan documents occurred. Further, as made clear in this court's Order Regarding Debtors' Limited Objections to Claims of Bank of America, N.A., dated January 18, 2013, many components of Bank of America's claims in the bankruptcy cases necessarily depend on whether the debtors were in default. Significantly, therefore, the outcome of the Adversary Proceeding will have a direct impact on Bank of America's claims against the debtors. It could not be more clear that the Guarantor Arbitration, as to both its prosecution and its outcome, will likely deprive this court of its authority and flexibility to decide the issues in the Adversary Proceeding, the outcome of which directly affects the claims process.
Finally, and alternatively, if Bank of America prevails in the Guarantor Arbitration, and proceeds to collect from the guarantors, any amount collected will reduce the amount of its claims against the debtors. As Bank of America recognizes, and has argued, even if the guarantors were then to try and recover from the debtors pursuant to 11 U.S.C. §§ 502(e) and 509, the debtors would be able to contest the guarantors' claims on the same basis it is currently contesting Bank of America's claims. Thus, the Guarantor Arbitration may, if Bank of America is successful, result in a decrease of the debtors' liabilities, regardless of whether the guarantors bring an action against the debtors to recover any amounts paid. The test for "related to" jurisdiction is easily satisfied.
As an initial matter, seeking a determination that the automatic stay under § 362(a)(1) applies to non-debtor litigation pursuant to the "unusual circumstances" exception does not require an adversary proceeding. See 10 Alan N. Resnick & Henry J. Sommer, Collier on Bankruptcy ¶ 7001.08 (16th ed. rev. 2012) ("[A] distinction should be made between those situations covered by an automatic injunction or stay, such as those covered by section 362(a) of the Code, and those in which a proceeding must be commenced to obtain an injunction."). Therefore, the debtors' motion to confirm that the automatic stay applies to the Guarantor Arbitration by virtue of the "unusual circumstances" exception was procedurally proper.
A request for an injunction pursuant to the court's powers under § 105
The debtors' request to issue an injunction pursuant to the court's powers under § 105 was procedurally proper because an adversary proceeding had already been commenced against Bank of America. The Adversary Proceeding involves claims by the debtors against Bank of America regarding the loan transactions and counterclaims by Bank of America against the debtors to collect under the loan documents. As explained, the Adversary Proceeding and the Guarantor Arbitration are interrelated and contain overlapping issues, particularly as to whether the debtors were in default. It is appropriate, therefore, for the debtors to seek an injunction pursuant to § 105 in the Adversary Proceeding. Requiring an entirely new adversary proceeding would have been inefficient and unnecessary given the close relation between the Adversary Proceeding and the Guarantor Arbitration. Rule 65 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Rule 7065 of the Federal Rules of Bankruptcy Procedure, expressly permits the relief sought by the debtors to be made by motion in the Adversary Proceeding.
While the motion was initially filed in the bankruptcy cases, during the hearing on the motion, counsel for the plaintiffs made an oral motion in the Adversary Proceeding for an injunction, which was later supplemented in writing. Even if the failure to initially file the motion in the Adversary Proceeding was improper, interests of judicial economy and the lack of prejudice to Bank of America warranted addressing the merits of the motion. Bank of America was provided with notice of the motion. It had the very same opportunity to defend against the motion if it had been filed in the Adversary Proceeding. A hearing was conducted on the debtors' motion in which Bank of America had the opportunity to, and did, cross-examine the debtors' witnesses. Bank of America was not prejudiced by what it perceives to be a procedural irregularity.
Bank of America contends that the Stay Order contradicts the Fourth Circuit's decisions in Credit Alliance Corp. v. Williams, 851 F.2d 119 (1988) and Winters v. George Mason Bank, 94 F.3d 130, 134 (4th Cir.1996) because the "unusual circumstances" exception recognized in Piccinin for the application of the stay does not exist to protect guarantors. However, as set forth in the Stay Order, this court does not read Credit Alliance or Winters as such an expansive departure from the Fourth Circuit's analysis in Piccinin. Rather, these decisions, while clarifying and distinguishing Piccinin, established what can be viewed as a "guarantor-plus" standard.
In Piccinin, the Fourth Circuit recognized that the automatic stay under § 362(a)(1) may in "unusual circumstances" apply to non-debtors. 788 F.2d
Id. In providing examples of what it considered to be "unusual circumstances," the court described the facts of three cases, all of which involved a creditor's action against the debtors' guarantors. Id.
Following its Piccinin decision, the Fourth Circuit in Credit Alliance reaffirmed the "unusual circumstances" exception but declined to hold that the exception applied to the guarantor litigation in that case. 851 F.2d at 121-122; see also Winters, 94 F.3d 130, 133-34 (discussing Credit Alliance and the "unusual circumstances" exception in the guarantor context). However, in both Credit Alliance and Winters, as discussed below, there were no circumstances whatsoever suggesting that the particular actions against the non-debtors presented "unusual circumstances." In Credit Alliance, a default judgment had already been entered against the guarantors before the debtor sought to enjoin garnishment proceedings against the guarantors. 851 F.2d at 120. In Winters, the creditor had already converted the non-debtor's stocks, which served as collateral for the debtors' obligation to the creditor, prior to the non-debtor bringing an action in the bankruptcy court arguing that the conversion violated the stay. 94 F.3d at 133. The Fourth Circuit in both cases explicitly recognized that the facts before it did not present "unusual circumstances." Winters, 94 F.3d at 134 ("This case does not present such an unusual situation."); Credit Alliance, 851 F.2d at 121-122 (stating "[t]here is nothing `unusual' about this guaranty agreement that would permit the guarantor ... to invoke the statutory protection of § 362" and "neither Penn Hook [the debtor] nor its estate is jeopardized by the judgment against Williams [the guarantor]").
Both Credit Alliance and Winters recognize the validity of the "unusual circumstances" exception to § 362(a)(1), and these decisions do not abrogate the exception as to suits seeking to enforce guaranty agreements. Rather, what is clear from these decisions, as provided in the Stay Order, is that a suit against a debtor's guarantor does not in and of itself constitute "unusual circumstances," but if there are other circumstances present bringing the guarantor litigation within the scope of the exception, then such litigation will be stayed pursuant to § 362(a)(1).
While the circumstances existing in the instant case are not as dire as those presented in Piccinin, they are far from those that existed in Winters and Credit Alliance. The Guarantor Arbitration is not your typical garden-variety guarantor lawsuit, despite Bank of America's attempts to characterize it as such. In Winters and
Another significant difference between the Guarantor Arbitration and the circumstances in Winters and Credit Alliance is the existence of the Adversary Proceeding and the effect it will have on Bank of America's claims in the bankruptcy case. As provided in the Stay Order, the issues presented in the Guarantor Arbitration encompass those that will be argued and decided in the Adversary Proceeding, particularly those relating to whether the debtors actually were in default of the loan documents. While the Adversary Proceeding and the Guarantor Arbitration nominally involve different parties, both require the debtors' time, efforts and resources to prosecute and defend. Although a judgment against the guarantors will not automatically result in a judgment against the debtors, the debtors are the ones who will likely be defending the Guarantor Arbitration given the intensely contested issues over default. One could deem Bank of America's initiation of the Guarantor Arbitration as an attempt to do indirectly what it cannot do directly simply by circumventing the Adversary Proceeding and pursuing the debtors' guarantors when issues still exist over whether the debtors were in default, a precondition to recovery from the guarantors. See In re Otero Mills, Inc., 21 B.R. 777, 778 (Bankr. D.N.M.1982) ("This power to enjoin assures that a creditor may not do indirectly that which he is forbidden to do directly.").
While the court in Credit Alliance recognized the policy behind enforcing guaranty
Bank of America also argues that two cases cited by the court are distinguishable from the facts of the instant case and therefore should not have been used as support for the Stay Order. See Lazarus Burman Associates, L.B. v. National Westminster Bank USA (In re Lazarus Burman Associates, L.B.), 161 B.R. 891 (Bankr.E.D.N.Y.1993); First Nat'l Bank v. Kanawha Trace Dev. Partners (In re Kanawha Trace Dev. Partners), 87 B.R. 892, 896-97 (Bankr.E.D.Va.1988). Bank of America notes that in Lazarus and Kanawha, the non-debtors were contributing their own capital to the debtors' reorganization efforts, whereas here the guarantors are not. The critical fact, however, as the court sees it is that the non-debtor litigation threatens the ability of the debtors to obtain necessary funding for the reorganization plan, regardless of where or from whom the funding is coming. Just like in Lazarus and in Kanawha, the Guarantor Arbitration will likely impair the debtors' ability to fund their reorganization plan. See, e.g., Gander Partners, LLC v. Harris Bank, N.A., 432 B.R. at 788 (recognizing that the debtors' "principals' credit standings could be adversely affected endangering the [d]ebtors by decreasing their ability to guarantee the [d]ebtors' efforts to refinance" if litigation against the principals were not stayed). Based on the foregoing, the court finds that Bank of America is unlikely to succeed on the merits of its appeal of the court's holding that the stay applies to the Guarantor Arbitration by virtue of the "unusual circumstances" exception.
Bank of America argues that the court erroneously relied on § 362 for authority to enter a stay instead of applying the four-pronged test for preliminary injunctions. The assertion that the court merely relied on § 362 to stay the Guarantor Arbitration is incorrect. In the Stay Order, the court, after deciding that the circumstances fell within the "unusual circumstances" exception to which § 362(a)(1) applied, stated that these same circumstances also justify granting the debtors an injunction pursuant to § 105.
The "unusual circumstances" exception to § 362(a)(1), and an injunction pursuant to the court's powers under § 105, are two separate and distinct grounds on which the court can stay non-debtor litigation. See Piccinin, 788 F.2d at 1003 ("There are thus four grounds [11 U.S.C. § 362(a)(1), 11 U.S.C. § 362(a)(3), 11 U.S.C. § 105, and the court's general equity powers] on which the bankruptcy court may enjoin suits against the bankrupt or its assets and property."); Kreisler, 478 F.3d 209 (distinguishing between the "unusual circumstances" exception and an injunction under the court's 11 U.S.C. § 105 powers); Kanawha, 87 B.R. at 897 n. 3. While the former does not require the same analysis as the latter, one set of circumstances may implicate and warrant relief on both grounds. See Piccinin, 788 F.2d at 999-1004 (discussing the different circumstances that warrant relief under the "unusual circumstances" exception and an injunction pursuant to § 105); Kreisler, 478 F.3d 209 (stating that while the "unusual circumstances" exception did not apply, the debtors could have sought injunctive relief under § 105).
The court concluded in the Stay Order that the circumstances of the Guarantor Arbitration, as it relates to the debtors' bankruptcy proceedings, warranted relief on two separate grounds — that the automatic stay under § 362(a)(1) applied by virtue of the "unusual circumstances" exception and, alternatively, an injunction pursuant to the court's powers under § 105. Accordingly, even if a party or a higher court were to disagree with this court's conclusion that the "unusual circumstances" exception applied, the Guarantor Arbitration should nevertheless be enjoined pursuant to § 105.
Bank of America argues, however, that the court in granting an injunction under § 105 erred because it failed to apply the traditional four-pronged test for a preliminary injunction pursuant to Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). In Winter, the Court articulated the standard for a preliminary injunction in a non-bankruptcy
While courts often use the traditional preliminary injunction standard in analyzing a request to enjoin non-debtor litigation under § 105, that standard is modified and adapted to the bankruptcy context.
However, in discussing what circumstances warrant an injunction under § 105, the Fourth Circuit has made very clear that the critical, if not decisive, issue over whether injunctive relief should be granted is whether and to what extent the non-debtor litigation interferes with the debtors' reorganization efforts. See Piccinin, 788 F.2d at 1003-09; Kreisler, 478 F.3d at 215. In Piccinin, the court repeatedly articulated that an injunction is warranted when the non-debtor litigation may interfere with a debtor's reorganization efforts or affect the bankruptcy estate. 788 F.2d at 1003 (stating that bankruptcy courts have "ample power [under § 105] to enjoin actions excepted from the automatic stay which might interfere in the rehabilitative process whether in a liquidation or in a reorganization case"); Id. (acknowledging that an injunction may be granted only if the court finds that a "failure to enjoin would effect [sic] the bankruptcy estate and would adversely or detrimentally influence and pressure the debtor through the third party") (quoting Otero Mills, Inc., 25 B.R. 1018, 1020
In Kreisler, a relatively recent decision by the Fourth Circuit, the court recognized the availability of a § 105 injunction to protect the debtors' ability to successfully reorganize. In that case, the debtors' wholly-owned subsidiary was being sued on an ejectment action in state court. Kreisler, 478 F.3d at 211. The debtors argued that the stay applied by virtue of §§ 362(a)(1) and (a)(3). Id. at 213. The court held that the stay did not apply under § 362, but wrote the following regarding what remedies the debtors could have pursued:
Id. at 215.
The decision in Kreisler is significant for two reasons. First, while the court did not specify what standard for relief applied to a § 105 injunction, it did articulate and reemphasize what the court in Piccinin considered to be the critical finding for such an injunction, i.e., that the non-debtor litigation will deprive the debtors of funds needed for their reorganization or put detrimental pressure on their reorganization efforts. Second, the decision clarifies that the Fourth Circuit does not limit injunctive relief under § 105 to Piccinin-like circumstances where the debtor faces mass tort litigation. Rather, where the facts are sufficient to demonstrate that the non-debtor litigation adversely impacts the debtors reorganization efforts, injunctive relief is warranted. This applies even if, as in the instant case, the non-debtor litigation involves a creditor seeking to enforce its guaranty agreement against the debtors' guarantors.
Accordingly, the precise circumstances that the Fourth Circuit has held warrants an injunction of non-debtor litigation are present in the instant case, as recognized in the Stay Order. Although this may be sufficient by itself to warrant an injunction under § 105 in the Fourth Circuit, these circumstances also satisfy the four-pronged test for the traditional preliminary injunction.
The findings made in the Stay Order, which focused on the detrimental impact the Guarantor Arbitration would have on the debtors' ability to reorganize, were sufficient to establish both a finding of irreparable injury and a likelihood of success
While the court did not discuss the debtors' chances of obtaining a successful reorganization, such a finding was encompassed by, and implicit in, the court's focus on protecting the debtors' reorganization efforts. See Eagle-Picher, 963 F.2d at 860 ("In view of the bankruptcy court's protection of Eagle-Picher's [the debtor] reorganization efforts, it is implicit in its decision that it believed Eagle-Picher had some realistic possibility of successfully reorganizing under Chapter 11."); but see Excel Innovations, 502 F.3d at 1097 (stating that it is not a high burden to show reasonable likelihood of success in reorganization, but a bankruptcy court must consider the issue before granting an injunction). The Sixth Circuit in Eagle-Picher acknowledged such an implicit finding, stating that the debtor's bankruptcy petition had been before the court "for over a month" and the court was "thoroughly familiar" with the reorganization plan. Id. Similar to the bankruptcy case in Eagle-Picher, the debtors' bankruptcy cases have been before the court since March 9, 2012, and it would be an understatement to say that there have been a copious number of motions and matters decided by the court within these cases. The court is thus very familiar with the debtors' efforts to reorganize. The findings made in the Stay Order evidencing the court's intent to protect these efforts imply its determination that the debtors, through the course of these bankruptcy proceedings, have shown a likelihood of achieving a successful reorganization.
The same is true for the remaining prongs of the preliminary injunction standard, i.e., whether the balance of harms and the public interest weighed in favor of granting the injunction. While the court did not explicitly address these prongs, such considerations were encompassed by the recognition that the Guarantor Arbitration would significantly interfere with the debtors' chances at a successful reorganization. These findings clearly recognize that the arbitration would undermine the very purpose for filing bankruptcy and the protections afforded by the Bankruptcy Code. See Fisher v. Apostolou, 155 F.3d 876, 882 (7th Cir.1998) (acknowledging that the bankruptcy court did not discuss whether the injunction would harm the public interest, but stating "given that both the terms and the underlying purpose of the federal bankruptcy code are geared, at least in part, to protect the public interest, we have no trouble concluding that the bankruptcy court was required to consider it when weighing the merits" of the request for an injunction); Harris N.A. v. Gander Partners, LLC, 442 B.R. at 887-88 (explaining why the interests of obtaining a successful reorganization justify a temporary stay of the guarantor litigation, and stating that "the public interest is best served if the reorganization is allowed to run its course with the assistance of the
The direct adverse impact on the debtors' ability to reorganize was not the only basis for the Stay Order, however. Many courts have also stayed non-debtor litigation when such litigation would impair the court's jurisdiction over the bankruptcy case or an adversary proceeding pending before the court.
In sum, there are two reasons reflected in the Stay Order why relief under § 105 was warranted in the instant case, even if the "unusual circumstances" exception to § 362(a)(1) did not apply: first, the Guarantor Arbitration significantly impacts the debtors' reorganization efforts, mainly by hindering if not demolishing the debtors' ability to fund the plan and requiring the debtors' time, efforts and resources at a critical stage of the bankruptcy case; and second, the Guarantor Arbitration would directly undermine this court's jurisdiction over the pending Adversary Proceeding and administration of the bankruptcy cases. Each of these reasons standing alone is sufficient to grant injunctive relief under § 105.
Bank of America is also unlikely to satisfy the other requirements that are necessary to issue a stay of the order. Bank of America contends that it will be irreparably harmed if the order is not stayed because it is being denied (1) its procedural rights, (2) its right to enforce the guaranty agreement, and (3) its right to prosecute the Guarantor Arbitration while the debtors are free to prosecute the Adversary Proceeding.
As explained above, Bank of America was not denied its procedural rights when the court heard the debtors' motion in the bankruptcy cases. Any procedural deficiency did not prejudice the bank because
It is unclear to the court why allowing the Adversary Proceeding to proceed while staying the Guarantor Arbitration is patently unfair to Bank of America, as the bank argues. The debtors only sought a stay of the Guarantor Arbitration through the confirmation hearing — a delay of about three months. Confirmation of the plan may resolve all guarantor issues; the plan may not be confirmed; but, in any event, unless otherwise agreed by the parties or ordered by the court, the Guarantor Arbitration may proceed after the confirmation hearing. This relatively short delay is not unfair to Bank of America and must be balanced against the almost certain detrimental effect allowing the arbitration to proceed would have on the reorganization prospects and administration of the estate.
The bank's arguments that the balance of the equities and the public interest weigh in favor of staying the Stay Order pending appeal focus on the policy behind enforcing guaranty agreements. As already explained, such interests give way in this particular instance to the interests of protecting the debtors' reorganization efforts as well as this court's jurisdiction. Based on the foregoing, the court is not persuaded that Bank of America has satisfied the requirements for a stay pending appeal.
