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PJC Technologies, Inc. v. C3 Capital Partners

January 27, 2010

PJC TECHNOLOGIES, INC. D/B/A METRO CIRCUITS AND D/B/A SPEEDY CIRCUITS, DEBTOR/APPELLANT,
v.
C3 CAPITAL PARTNERS, L.P., APPELLEE,
MICHAEL T. POWERS, TRUSTEE.



The opinion of the court was delivered by: Charles J. Siragusa United States District Judge

DECISION and ORDER

INTRODUCTION

Siragusa, J. Appellant PJC Technologies, Inc. ("PJC") has moved (Docket No. 2) for a stay, without a bond, pursuant to Rule 8005 of the Federal Rules of Bankruptcy Procedure. In that regard, PJC seeks to prohibit Appellee C3 Capital Partners, L.P. ("C3 Capital") from selling, or otherwise disposing of PJC's stock, owned by a third party, at the public auction, scheduled for January 29, 2010, pending PJC's appeal to this Court from the January 20, 2010, Decision and Order of the Bankruptcy Court. The Bankruptcy Court's Decision and Order was entered in PJC's adversary proceeding against C3 Capital, Adversary Proceeding No. 09-2119, and denied the PJC's motion for a preliminary injunction. Following a full briefing and oral argument on the motion for a stay, the Court denies the application.

BACKGROUND

On January 20, 2010, the Honorable John C. Ninfo, II, U.S. Bankruptcy Judge, entered a written Decision and Order denying PJC's application for an injunction to prohibit sale of its stock pending its reorganization pursuant to Chapter 11 of the Bankruptcy Code. The stock at issue is owned by the Peter J. Casson Declaration of Trust, which is not a party either to the adversary or the Chapter 11 proceeding, or the subject application for a stay. PJC argues that without the stay, the sale of its stock will go through on Friday, January 29, 2010, and it will thereby lose its ability to appeal the Bankruptcy Court's decision denying its request for a discretionary injunction.

STANDARDS OF LAW

First, with regard to the question of a stay, Rule 8005 of the Federal Rules of Bankruptcy Procedure provides in relevant par as follows:

Rule 8005. Stay Pending Appeal

A motion for a stay of the judgment, order, or decree of a bankruptcy judge, for approval of a supersedeas bond, or for other relief pending appeal.may be made to the district court..

Id. (1987). The Second Circuit, in Hirschfeld v. Board of Elections, City of New York, 984 F.2d 35 (2d Cir. 1993), set out the factors the Court must consider: In this Circuit, four factors are considered before staying the actions of a lower court: (1) whether the movant will suffer irreparable injury absent a stay, (2) whether a party will suffer substantial injury if a stay is issued, (3) whether the movant has demonstrated "'a substantial possibility, although less than a likelihood, of success'" on appeal, and (4) the public interests that may be affected.

Id. at 39 (citations omitted); see also In re Country Squire Assoc. Of Carle Place, L.P., 203 B.R. 182, 183 (2d Cir. BAP 1996) (applying the Hirschfeld factors to a stay requested under Bankruptcy Rule 8005). The Second Circuit has "also noted that the degree to which a factor must be present varies with the strength of the other factors, meaning that "'more of one [factor] excuses less of the other.'" In re World Trade Center Disaster Site Litigation, 503 F.3d 167, 170 (2d Cir. 2007) (quoting Thapa v. Gonzales, 460 F.3d 323, 334 (2d Cir.2006) (quoting Mohammed v. Reno, 309 F.3d 95, 101 (2d Cir. 2002)).

The underlying action being appealed for which the stay is being sought relates to Judge Ninfo's decision denying PJC's request for an injunction, pursuant to Bankruptcy Code section 105, prohibiting the sale of its stock. Section 105, in relevant part, states:

(a) The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or ...


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