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In re Cook Investments NW, SPNWY, LLC

United States District Court, W.D. Washington, Tacoma

August 24, 2017

In re COOK INVESTMENTS NW, SPNWY, LLC., et al., Debtors,
v.
COOK INVESTMENTS NW, SPNWY, LLC., et al., Appellees. GAIL BREHM GEIGER, Acting United States Trustee for Region 18, Appellant, Bankruptcy No. 16-44782

          ORDER DENYING APPELLANT'S MOTION FOR A STAY

          BENJAMIN H. SETTLE United States District Judge.

         This matter comes before the Court on Appellant Gail Brehm Geiger's, Acting United States Trustee for Region 18, (“Trustee”) motion for stay pending appeal (Dkt. 5). The Court has considered the pleadings filed in support of and in opposition to the motion and the remainder of the file and hereby denies the motion for the reasons stated herein.

         I. PROCEDURAL AND FACTUAL BACKGROUND

         On November 11, 2016, Cook Investments NW, SPNWY, LLC. (“Debtor”) filed a Chapter 11 voluntary petition in the Western District of Washington United States Bankruptcy Court. In re Cook Investments NW, SPNWY, LLC, Case No. 16-44782-BDL (Bankr. W.D. Wash.), Dkt. 1.

         On January 18, 2017, the Trustee moved to dismiss the petition for cause. Id., Dkt. 32. The Trustee asserted that the Debtor entered into a lease with a commercial grower of marijuana, N.T. Pawloski LLC d/b/a Green Haven (“Green Haven”). Id. The Trustee argued that the petition should be dismissed for gross mismanagement of the estate because leasing a premises to an entity that grows marijuana violates the Controlled Substances Act, 21 U.S.C. § 801 et seq. Id.

         On March 9, 2017, the court denied the motion with leave to renew because the Debtor asserted that it could propose a plan that specifically rejected the Green Haven lease. Id., Dkt. 67.

         On March 28, 2017, the Debtor filed a second amended plan of reorganization (“Plan”). Id., Dkt. 93.

         On April 3, 2017, the Debtor filed a motion for order authorizing rejection of unexpired lease. Id., Dkt. 102.

         On April 27, 2017, the Trustee filed an objection to the Plan arguing that “any confirmation order and related plan injunctions entered in this case would tacitly promote ongoing criminal conduct” regardless of whether the Plan accepted or rejected the Green Haven lease. Id., Dkt. 125. The Trustee sought rejection of the Plan because it did “not meet the confirmation requirements of 11 U.S.C. § 1129(a)(3).” Id. at 2.

         On May 22, 2017, the court granted the motion to reject the Green Haven lease and deemed the lease “rejected pursuant to Bankruptcy Code § 365(a), effective immediately.” Id., Dkt. 138. The court also approved the Plan. Id., Dkt. 139.

         On June 21, 2017, the court confirmed the Plan. Id., Dkt. 153. This appeal followed.

         On June 28, 2017, the Trustee moved for a stay pending appeal. Id., Dkt. 160. On July 24, 2017, the court denied the motion. Id., Dkt. 186.

         On July 27, 2017, the Trustee filed a motion for a stay pending resolution of the appeal. Dkt. 5. On August 7, 2017, the Debtor responded. Dkt. 7. On August 11, 2017, the Trustee replied. Dkt. 9.

         II. DISCUSSION

         The question of whether a stay pending appeal is warranted requires consideration of four factors: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Nken v. Holder, 556 U.S. 418, 426 (2009) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). “The party requesting a stay bears the burden of showing that the circumstances justify an exercise of [this Court's] discretion.” Id. at 433-34

         A. ...


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