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Liberty Lobby Bankruptcy — Memorandum Order (9/10/2001)


In Re:




Civil Action No.: 01-1505 (GK)
Bankruptcy Case No. 01-1234


SEP 10 2001

Memorandum Order

This action is the latest in a series of legal battles between debtor-appellant, Liberty Lobby, Inc. (Liberty Lobby) and its creditor, Legion for the Survival of Freedom, Inc. (LSF). The matter is before the Court on Liberty Lobby’s Emergency Motion for Stay Pending Appeal.

Specifically, Liberty Lobby seeks to stay implementation of the June 29, 2001, and July 2, 2001 Orders of the United States Bankruptcy Court for the District of Columbia pending their appeal before this Court. Those orders dismissed Liberty Lobby’s most recent bankruptcy case as a serial filing and enforced a lien provision in favor of its creditor, LSF. Thereafter, Liberty Lobby filed before the Bankruptcy Court an Emergency Motion for a Stay of those Orders Pending Appeal. On July 5, 2001, United States Bankruptcy Judge, S. Martin Teel, denied that motion. This appeal and Emergency Motion followed. Upon consideration of the motion, opposition, reply, the transcript of the hearing before Judge Teel on July 5, 2001, and the entire record herein, for the seasons stated below, the Court denies Liberty Lobby’s motion.

  1. A district court will reverse a decision of the bankruptcy court on a motion for stay pending appeal only for abuse of discretion. Rothenberg v. Ralph D. Kaiser Company, Inc. 200 B.R. 461 (D.D.C. 1996).
  2. To obtain a stay of the bankruptcy court’s order pending appeal, the moving party must show that:
    1. it has a strong likelihood of success on the merits;
    2. it will suffer irreparable harm in the absence of a stay;
    3. other parties will not suffer substantial harm if the stay is granted; and
    4. the stay would not harm the public interest. Serono Laboratories v. Shalala, 158 F.3d 1313, 1317 (D.C. Cir. 1998).

    If the moving party fails to show a strong likelihood of success on the merits, a motion for a stay cannot be granted. See e.g., Serono Laboratories, 158 F.3d at 1325-6 (likelihood of success on the merits is dispositive of preliminary injunction issue; other factors are inextricably linked to this prong).

  3. The Court denies Liberty Lobby’s request to stay the Bankruptcy Court’s order dismissing its case and enforcing the lien on the grounds that there is no likelihood of success on the merits. The basis for the Bankruptcy Court’s decision dismissing the case and enforcing the lien was that in a prior case, a Chapter 11 Bankruptcy Plan had been confirmed and substantially consummated between Liberty Lobby and its principal creditor, LSF. Section 1127(b) of the Bankruptcy Code prohibits modification of that plan. Relying on applicable case law, the Bankruptcy Court found that Liberty Lobby’s new filing was, in effect, an attempt to circumvent the Bankruptcy Code’s prohibition against modification because it was an attempt to change the terms of the confirmed plan. The Bankruptcy Court concluded that it would be an abuse of the bankruptcy system and a violation of the Bankruptcy Code to permit Liberty Lobby to file a successive case and thereby upset the rights that have been settled as part of the confirm plan and prior case. Liberty Lobby has not put forth any argument showing that the Bankruptcy Court abused its discretion in reaching this decision. Accordingly, based on the foregoing, the Court concludes that the Bankruptcy Court did not abuse its discretion in dismissing the case and in denying the stay. The Motion to Stay the Bankruptcy Court’s orders is therefore denied. An Order will issue with this Memorandum.

Date: Sept. 10, 2001

Gladys Kessler
United States District Judge