United States District Court, D. Delaware
IN RE COLOR SPOT HOLDINGS, INC., et al, Debtors.
COLOR SPOT HOLDINGS, INC., et al, Appellees. WINTERS NURSERY LLC, FOREST GROVE NURSERY LLC, WINTERS FOREST GROVE LLC, BLOOMING FARM, INC., and FALLBROOK NURSERY LLC, Appellants,
the Court is the Emergency Motion (D.I. 3, 4, 12) of the
above-captioned Appellants seeking entry of an order granting
a limited stay pending appeal of the Bankruptcy Court's
order, dated August 10, 2018 (B.D.I. 290) ("Second
Supplemental Order"), which, inter alia,
approved the Debtors' assumption and assignment of
certain leases ("Leases") to winning bidder and
designated purchaser TreeSap Farms, LLC as part of a sale of
substantially all of the Debtors' assets. The Debtors
(D.I. 10, 11), TreeSap (D.I. 13), and Wells Fargo Bank (D.I.
15, 16) have each filed briefs in opposition. For the reasons
set forth below, the Emergency Motion is denied.
29, 2018, each of the Debtors filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code. On June 4,
2018, Debtors filed a motion to approve the sale of
substantially all of their assets, including the assumption
and assignment of certain executory contracts and unexpired
leases, and to approve procedures in connection therewith.
June 25, 2018, the Bankruptcy Court entered an order
scheduling a hearing on the approval of the sale and
approving bid procedures. (B.D.I. 134). On July 13, 2018,
Appellants filed an initial objection (B.D.I. 201) to the
assumption and assignment of the Leases. An auction was held
on July 19-20, 2018, at which the only two bidders for
substantially all of the Debtors' assets were Black
Diamond Commercial Finance and Wells Fargo. Debtors
ultimately determined that Wells Fargo's final bid was
the highest and best. (See D.I. 11 at Ex. E, 7/20/18
July 25, 2018, the Bankruptcy Court entered an order
approving the asset purchase agreement (B.D.I. 243) (the
"Sale Order"). On July 27, 2018, the Appellants
filed a supplemental objection to the assumption and
assignment of the Leases. (B.D.I. 253). On August 1, 2018,
the Bankruptcy Court held an evidentiary hearing in
connection with the Sale Order. At the conclusion of the
hearing, the Bankruptcy Court required TreeSap, Wells
Fargo's designee for the Leases, to provide Appellants
with additional information with respect to TreeSap's
financial wherewithal. (D.I. 4 at Ex. G, 8/1/18 Hr'g Tr.
at 141:7-21). TreeSap provided the additional information to
Appellants in an unredacted form and on a "professionals
eyes only" basis. (D.I. 4 at Ex. H, 8/9/18 Hr'g Tr.
at 6:2-8). On August 3, 2018, the Bankruptcy Court entered a
supplemental sale order, which approved the assumption and
assignment of certain contracts, resolved certain cure
amounts, and continued the evidentiary hearing with respect
to Appellants' objections. (B.D.I. 276; D.I. 16 at Ex.
3). On August 9, 2018, the Bankruptcy Court resumed and
concluded the evidentiary hearing, taking the matter under
advisement. On August 10, 2018, the Bankruptcy Court issued a
ruling from the bench, approving the assumption and
assignment of the Leases to TreeSap and overruling
Appellants' objections. The Bankruptcy Court's
detailed ruling on the record outlined its analysis of the
facts and law in support of its decision and cited the
detailed evidentiary record. (D.I. 4 at Ex. I, 8/10/18
Hr'g Tr.) That day, the Bankruptcy Court entered the
Second Supplemental Order approving the sale (B.D.I. 290). On
August 14, 2018, Appellants filed their notice of appeal
(D.I. 1), along with an emergency motion for limited stay
pending appeal (B.D.I. 302) (the "Bankruptcy Stay
Motion"). On August 15, 2018, the Bankruptcy Court held
a hearing and denied the Bankruptcy Stay Motion. (D.I. 12,
8/15/18 Hr'g Tr. at 48:2-53:9). Appellants filed the
Emergency Motion with respect to its appeal in this Court the
same day -August 15, 2018 - seeking a "limited stay
pending appeal" in light of the scheduled August 17,
2018 sale closing date. (D.I. 3).
Emergency Motion (D.I. 3) and accompanying Declaration, which
attaches transcripts from the evidentiary hearings on this
matter (D.I. 4), were filed contemporaneously with a motion
for permission to seal (D.I. 5). According to Appellants, the
Emergency Motion and transcripts contain certain confidential
financial information provided by TreeSap to Appellants under
the "professional eyes only" confidentiality
designation. In addition, on August 1, 2018, the Bankruptcy
Court previously granted a prior motion filed by TreeSap to
file an exhibit to the Declaration of Jeffrey Pettit, CFO of
TreeSap and its newly formed subsidiary TSH Opco, under seal.
(B.D.I. 272). The Court cites to pleadings and transcripts
herein to avoid any specific reference to financial
information which might be deemed confidential.
from the Bankruptcy Court to this Court are governed by 28
U.S.C. § 158. District courts have jurisdiction to hear
appeals "from final judgments, orders, and
decrees." 28 U.S.C. § 158(a)(1).
granting of a motion for stay pending appeal is discretionary
with the court. See In re Trans World Airlines,
Inc., 2001 WL 1820325, at *2-3 (Bankr. D. Del. Mar. 27,
2001). Appellant bears the burden of proving that a stay of
the Confirmation Order is warranted based on the following
criteria: (1) whether the movant has made "a strong
showing" that it is likely to succeed on the merits; (2)
whether the movant will be irreparably injured absent a stay;
(3) whether a stay will substantially injure other interested
parties; and (4) where the public interest lies. Republic
of Philippines v. Westinghouse Electric Corp., 949 F.2d
653, 658 (3d Cir. 1991). The most critical factors, according
to the Supreme Court, are the first two: whether the stay
movant has demonstrated (1) a strong showing of the
likelihood of success, and (2) that it will suffer
irreparable harm - the latter referring to harm that cannot
be prevented or fully rectified by a successful appeal.
In re Revel AC, Inc., 802 F.3d 558, 568 (3d Cir.
2015) (citing Nken v. Holder, 556 U.S. 418, 434
(2009). The Court's analysis should proceed as follows:
Did the applicant make a sufficient showing that (a) it can
win on the merits (significantly better than negligible but
not greater than 50%) and (b) will suffer
irreparable harm absent a stay? If it has, we balance the
relative harms considering all four factors using a
'sliding scale' approach. However, if the movant does
not make the requisite showings on either of these first two
factors, the inquiry into the balance of harms and the public
interest is unnecessary, and the stay should be denied
without further analysis.
Revel AC, 802 F.3d at 571 (emphasis in text)
(internal quotations and citations omitted).
Likelihood of ...