In Re: 60 91st Street Corp.
- Lorna Schofield
- 1:20-cv-04032
- U.S. District Court · Southern District of New York
- 3
In Mortimer v. Sorvino, Judge Schofield denied Kim Mortimer’s request to pause bankruptcy proceedings and the appeal of the trustee’s appointment.
Kim Mortimer, Chapter 11 trustee Heidi J. Sorvino, the creditors who could be affected by accruing interest, and the administration of the bankruptcy estate.
What happened
In Mortimer v. Sorvino, pro se appellant Kim Mortimer asked the district court to stop the marketing and possible sale of her apartment building while she appealed the bankruptcy court’s order appointing a Chapter 11 trustee.
The court applied four factors for deciding whether to pause the bankruptcy proceedings: likely success on appeal, irreparable harm, harm to others, and the public interest. It found insufficient support for success on appeal, possible harm to other creditors from added interest, and possible harm to the public interest in promptly administering the bankruptcy estate.
Judge Lorna G. Schofield denied the motion to stay. The court also said it lacked jurisdiction to stay a sale order because the bankruptcy court had not yet ruled on the sale request, and found insufficient evidence that seeking an injunction in bankruptcy court first would have been impracticable.
The detailed version
- In Re: 60 91st Street Corp. · No. 1:20-cv-04032
- Lorna Schofield
- Aug. 31, 2020
Background
Kim Mortimer, proceeding without a lawyer, appealed a bankruptcy court order directing the appointment of a Chapter 11 trustee in her bankruptcy proceeding. She previously sought a stay in the bankruptcy court, but that motion was denied. After the trustee, Heidi J. Sorvino, filed a motion in the bankruptcy court seeking authorization to sell property, Mortimer asked the district court to stay the marketing and possible sale of an apartment building at 60 West 91st Street. The bankruptcy court had not yet ruled on the sale motion.
The district court liberally construed Mortimer’s motion because she was proceeding without a lawyer. The court understood her to seek a stay of the trustee-appointment order while her appeal was pending.
Legal standard
Under Federal Rule of Bankruptcy Procedure 8007, the court considered four factors: the likelihood that Mortimer would win the appeal, the likelihood of irreparable harm without a stay, the harm a stay could cause others, and the public interest. The court described the likelihood of success on appeal as a critical factor.
Court’s analysis
The court denied the motion to stay. Even assuming that Mortimer could suffer irreparable harm, the record did not support the other factors. The court found no probability, or substantial possibility, that Mortimer would succeed in challenging the trustee-appointment order. Mortimer argued that the trustee had violated her Fourth and Sixth Amendment rights, but the court found insufficient support for those allegations. To the extent she relied on aggressive conduct by the trustee and a creditor at the property, the court stated that those events occurred after the trustee was appointed and therefore could not show that the appointment order was erroneous.
The court also found that the balance of harms did not favor a stay. The trustee explained that a stay would cause interest to accrue on a secured claim, which could harm other creditors. Regarding the public interest, the court stated that a stay could impede the prompt administration of the bankruptcy estate.
The court separately addressed any request to stay an order authorizing a sale. It said it lacked jurisdiction because the bankruptcy court had not yet ruled on the sale motion. To the extent Mortimer sought an injunction or suspension of the proceedings, the court found insufficient evidence that first seeking relief in the bankruptcy court would have been impracticable, as required by Rule 8007(b)(2)(A).
Disposition
Judge Lorna G. Schofield denied the motion to stay and directed the Clerk of Court to close Docket No. 18.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.