Phyto Tech Corp. v. Givaudan SA

Background

Phyto Tech Corp., doing business as Blue California ("Blue Cal"), sued Givaudan SA in 2019 seeking appointment of a liquidating trustee to wind up BGN Tech, LLC ("BGN"). The opinion states that Blue Cal and Givaudan were BGN’s sole members. In August 2022, the court-appointed trustee, Andrew De Camara, asked the court to approve a final report and plan for BGN’s wind-up and dissolution.

Givaudan objected only to specific provisions of the proposed Post-Termination Licensing Agreement, which addressed distribution of BGN’s intellectual-property rights and assets. On November 21, 2022, the court overruled that objection and approved the trustee’s plan in full through its Dissolution Order. The order authorized the trustee to carry out the wind-up and dissolution, including distribution of liquid assets, and allowed certain revisions needed to finalize the plan.

Givaudan appealed the Dissolution Order. It did not seek a pause of the order from either the district court or the Court of Appeals for the Second Circuit. In January 2023, the district court paused paragraphs 4 and 5 of the Dissolution Order, concerning certain continuing rights and responsibilities of the trustee, but did not pause paragraphs 1 through 3, which governed implementation of the dissolution plan.

Motion to enforce

The trustee then contacted the parties about distributing certain cash assets under the approved plan. Blue Cal agreed to the proposed distribution, but Givaudan did not respond. The trustee therefore refrained from distributing the cash. Blue Cal moved to enforce the Dissolution Order and sought an instruction that the trustee proceed with the distribution.

Givaudan argued that distribution of BGN’s liquid assets should wait until its appeal resolved the terms of the Post-Termination Licensing Agreement. The court treated this position as disagreement with enforcement of the Dissolution Order while the appeal was pending.

Court’s reasoning

The court explained that an appeal alone does not automatically suspend enforcement of an order. A party seeking a pause while appealing must request one and carry the burden of showing that it is necessary. The court identified four factors relevant to such a request: likely success on the merits, irreparable injury without a pause, harm to other interested parties, and the public interest.

Givaudan had never requested a pause of paragraphs 1 through 3. Even if its response to Blue Cal’s motion were treated as a request for a pause, Givaudan did not address any of the four factors and had not offered a bond or other security to obtain a pause. The court therefore concluded that no basis existed to stay or delay enforcement of the Dissolution Order pending Givaudan’s appeal.

Disposition

The court granted Blue Cal’s motion to enforce the Dissolution Order. The opinion states that the details of the enforcement were set out in a separate order filed at the same time. The Clerk was directed to close the motion on the docket.