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iii. In re Concepcion, 494 B.R. 622 (Bankr. D.P.R. 2013)
Issue: Whether the bankruptcy court should sua sponte lift the automatic stay to resolve the issues regarding a claim.
Holding: The bankruptcy court held that the stay should be modified to allow state court proceedings to continue. A creditor had claimed, among others, fraud against the debtor and another company in an action in state court that was currently stayed while the debtor was in bankruptcy. Most of the issues and law cited by the parties in disputes over the debtor's objection to the creditors claim involved Puerto Rican law. In resolving the claim objection, the court relied on In re Sonnex Industries, Inc., 907 F.2d 1280, 1286 (2d Cir. 1990) to determine whether it should sua sponte modify the stay to allow the parties to resolve the debtor's liability. The Sonnex factors included: "(1) whether relief would result in a partial or complete resolution of the issues; (2) lack of any connection with or interference with the bankruptcy case; (3) whether the other proceeding involves the debtor as a fiduciary; (4) whether a specialized tribunal with the necessary expertise has been established to hear the cause of action; (5) whether the debtor's insurer has assumed full responsibility for defending it; (6) whether the action primarily involves third parties; (7) whether litigation in another forum would prejudice the interests of other creditors; (8) whether the judgment claim arising from the other action is subject to equitable subordination; (9) whether movant's success in the other proceeding would result in a judicial lien avoidable by the debtor; (10) the interests of judicial economy and the expeditious and economical resolution of litigation; (11) whether the parties are ready for trial in the other proceeding; and (12) impact of the stay on the parties and the balance of harms." The court gave great weight to "judicial economy and efficiency" in modifying the stay.
iv. In re Brier Creek Corporate Center Associates Limited, 486 B.R. 681 (Bankr. E.D.N.C. 2013)
Issue: Whether the bankruptcy court's order extending the automatic stay to arbitration against the debtors' guarantors should be stayed pending the lender's appeal.
Holding: The court held that its order extending the automatic stay to arbitration against the debtors' guarantors should not be stayed pending the lender's appeal because the lender failed to establish the likelihood of success on appeal. The bankruptcy court extended the stay to the debtors' guarantors based on an unusual circumstances theory in conjunction with its power to issue "necessary and appropriate" orders under 11 U.S.C. § 105(a). The bankruptcy court reasoned the arbitration against the guarantors significantly impacted the debtors' reorganization by limiting its ability to obtain financing and diverting the debtors' resources as they attempted to confirm a plan. The lender seeking a stay of the bankruptcy court's order pending appeal argued, among others, that the unusual circumstances exception to extending the stay did not apply to guarantors. The bankruptcy court agreed that a guarantor's relationship to the debtor "does not in and of itself constitute 'unusual circumstances,'" but when an action against a
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