The purpose of a stay pending appeal is to mitigate the damage that can be done before the matter is substantively resolved. Thus, in In re Heotis, 2017 WL 4310513 at *2 (N.D.Ill.), the court stated that motions to stay pending appeal are similar to preliminary injunctions. Id. (citing In re A & F Enters., Inc. II, 742 F.3d 763, 766 (7th Cir. 2014)). Due to the similarity between stays and preliminary injunctions, the standards for the two are the same, i.e., like a motion for a preliminary injunction, the court needs to evaluate (1) the moving party’s likelihood of success on the merits, (2) the irreparable harm that will result to each side if the stay is either granted or denied in error, and (3) whether the public interest favors one side or the other. Id. The decision as to whether or not to grant a stay of an order pending appeal lies within the sound discretion of the court. See also In re Sabine Oil & Gas Corp., 548 B.R. 674, 681 (Bankr.S.D.N.Y. 2016) (quoting ACC Bondholder Grp. V. Adelphia Comm. Corp. (In re Adelphia Comm. Corp.), 361 B.R. 337, 346 (S.D.N.Y. 2007) (In exercising this discretion the court must consider four factors: “(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 interest that may be affected”).
Courts, however, are split on how to utilize the factors. Sabine Oil & Gas discussed this conflict in the context of Second Circuit authority. Some courts have stated that the inquiry involves a balancing of the four factors, i.e., the lack of any one factor is not dispositive to the success of the motion. See, e.g., Mohammed v. Reno, 309 F.3d 95, 101 (2nd Cir.2002); Beeman v. BGI Creditors’ Liquidating Trust (In re BGI, Inc.), 504 B.R. 754, 762 (S.D.N.Y.2014); Adelphia, 361 B.R. at 346–47 (articulating the disagreement as to the standard, stating that “the Second Circuit has never articulated such a rigid rule of law,” and determining to follow the practice of weighing the factors).
Other courts have held that, to be successful, the party must show satisfactory evidence on all four criteria. See General Motors, 409 B.R.24, 30 (Bankr.S.D.N.Y.2009) (citing In re Turner, 207 B.R. 373, 375 (2d Cir.BAP 1997)). In Heotis, the court stated that when evaluating the request for a stay, if the underlying appeal is meritless, then the other factors need not be addressed. If, however, an appeal has some merit, then the court uses a “sliding scale” approach, where “the greater the moving party’s likelihood of success on the merits, the less heavily the balance of harms must weigh in its favor, and vice versa.” Id. at *2.
Matthew T. Gensburg
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