Summary
This is an order of the United States Bankruptcy Court for the Middle District of Tennessee denying Joel Aaron Sutton and Terry Melissa Sutton’s emergency motion for a stay pending appeal. The court concluded that the debtors failed to demonstrate a strong or substantial likelihood of success on the merits of their challenge to the order granting PennyMac Loan Services, LLC relief from the automatic stay.
Topics
Practice areas
Questions Presented
- Whether the debtors satisfied the requirements for a stay pending appeal under Federal Rule of Bankruptcy Procedure 8007.
- Whether the debtors demonstrated a strong or substantial likelihood of success on their challenge to the order granting PennyMac relief from the automatic stay.
Holdings
- A motion for a stay pending appeal under Federal Rule of Bankruptcy Procedure 8007 is evaluated using the four preliminary-injunction factors: likelihood of success on the merits, irreparable injury absent a stay, substantial injury to other interested parties, and the public interest.
- A mere possibility of success on the merits is insufficient to support a stay pending appeal in the Sixth Circuit; the applicant must show a strong or substantial likelihood or probability of success.
- The debtors were not entitled to a stay pending appeal because they failed to demonstrate the required likelihood of success on their challenge to the order granting PennyMac relief from the automatic stay.
Key quotations
“Therefore, the mere “possibility” of success on the merits is not enough to justify a stay under Federal Rule of Bankruptcy Procedure 8007.” (at 1)
“Instead, there must be “a strong or substantial likelihood or probability of success on the merits.”” (at 2)
“IT IS, THEREFORE, ORDERED that the Debtors’ Emergency Motion for Stay Pending Appeal Pursuant to Federal Rule of Bankruptcy Procedure 8007 is DENIED.” (at 2)
Factual background
The debtors challenged the validity of a prepetition foreclosure sale and sought to stay the effect of the bankruptcy court's order granting PennyMac relief from the automatic stay. The court had previously denied the debtors' amended motion for a preliminary injunction based on the same challenges. The debtors sought a stay while pursuing an appeal to the Sixth Circuit Bankruptcy Appellate Panel.
Procedural history
The bankruptcy court granted PennyMac's motion for relief from the automatic stay. The debtors appealed to the Sixth Circuit Bankruptcy Appellate Panel and filed an emergency motion under Federal Rule of Bankruptcy Procedure 8007 seeking a stay pending appeal. The bankruptcy court denied the emergency motion.