In Re: CLST Enterprises, LLC

Background

Carl Thomson appealed a March 27, 2025 decision by the Bankruptcy Court approving the Chapter 11 trustee’s request to sell the debtor’s property at public auction and requiring Thomson and his wife to vacate the property by April 11, 2025. Thomson filed an application for emergency relief seeking a stay—that is, an order pausing the eviction—until the District Court resolved his appeal.

The debtor is a single-asset real estate debtor whose only asset is a brownstone at 19 East 75th Street in New York. Thomson and his wife are each fifty-percent members of the debtor, live at the property, and do not pay rent to the debtor. Thomson filed the Chapter 11 case on the debtor’s behalf in April 2024. After a secured judgment creditor sought appointment of a trustee, the Bankruptcy Court appointed Kenneth P. Silverman as Chapter 11 trustee.

The trustee moved for authority to auction the property and to require Thomson and his wife to leave. Thomson objected, arguing that he lacked authority to begin the bankruptcy case, that his wife lacked the mental capacity to authorize it, and that the proposed sale failed to protect her interests under 11 U.S.C. § 363. Chief Bankruptcy Judge Glenn rejected those objections, finding that an amended operating agreement gave Thomson alone authority to sign the bankruptcy petition, that the mental-capacity argument had been raised for the first time in an apparent effort to delay the sale, and that the trustee had sound business reasons for selling the property.

District Court’s Analysis

The District Court treated Thomson’s request as seeking extraordinary injunctive relief. To obtain that relief, Thomson had to show a likelihood of success on the merits, likely irreparable harm without an injunction, that the balance of equities favored him, and that an injunction served the public interest.

The court found that Thomson had not met that burden. It emphasized that he waited until the evening of April 9—less than 48 hours before the April 11 eviction deadline—to appeal and seek emergency relief, even though the Bankruptcy Court had issued its decision on March 27. The court stated that this delay undermined his claim of irreparable harm.

The court also found that Thomson had not made the required clear showing that he was likely to succeed on his appeal. At this stage, the record supported the Bankruptcy Court’s conclusions that the trustee had sound business reasons to sell the debtor’s only apparent asset and to require Thomson and his wife to vacate, and that the sale and eviction did not otherwise violate Section 363.

The court further concluded that the balance of equities did not favor emergency relief. It referred to the record concerning the timing of the bankruptcy filing, the trustee’s appointment, Thomson’s later challenge to his own authority to file the case, and his delay in seeking a stay after the sale and eviction were approved.

Disposition

Judge Mary Kay Vyskocil declined to issue the requested order to show cause and denied Thomson’s application for emergency relief. The court concluded that a hearing was unnecessary because the application could be resolved from the written record, the decision did not depend on disputed facts, and the court could consider the record from earlier stages of the bankruptcy appeal. This order addressed only the request for emergency relief; the opinion does not state that it resolved Thomson’s underlying appeal.