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In Re: Subacute Services

November 16, 2011

IN RE: SUBACUTE SERVICES, INC., DEBTOR.


The opinion of the court was delivered by: Kenneth A. Marra United States District Judge

OPINION AND ORDER

This cause is before the Court upon the Debtor Subacute Services, Inc.'s ("Debtor") Motion for Stay Pending Appeal (DE 1). Creditor Elizabeth Costlow ("Costlow") has filed a response to the motion. The Court has carefully considered the motion and the response and is otherwise fully advised in the premises.

I. Background

The facts, based upon the parties' respective statement of facts in their appellate briefs and the appellate record, are as follows:

On July 29, 2011, the Debtor filed its petition for relief pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida. (Costlow's Statement of Facts at 3.) On August 17, 2011, Costlow filed a motion to transfer the Debtor's Chapter 11 case to the Bankruptcy Court for the Northern District of Georgia. (Id.) The Honorable John K. Olson held a non-evidentiary hearing on the transfer motion on September 13, 2011. (Tr. of Sept. 13, 2011 hr'g, DE 1.) The next day, the Bankruptcy Court ordered the transfer of venue to the Northern District of Georgia. (September 14, 2011 Order, DE 1.)

In its order, the Bankruptcy Court noted the following: The Debtor operated as a manager and provided back-office support to six nursing home facilities all owned by entities which are in turn wholly-owned or controlled by the Debtor's sole shareholder, Richard W. Wolfe. Five of the nursing homes are located in the Northern District of Georgia and the sixth home is located in the Southern District of Florida. Prior to filing the bankruptcy petition, Mr. Wolfe terminated the management contracts held by the Debtor with each of the affiliated nursing home entities. The Debtor maintained its principal place of business in Lilburn, Georgia until the Debtor moved its principal place of business to Sunrise, Florida just prior to the filing of the petition. (Id. at 1-2.)

The Debtor listed 14 creditors, including seven personal injury tort or wrongful death claimants arising out of Georgia events. Costlow holds a wrongful death judgment against the Debtor which was entered by a Georgia state court in an amount in excess of $2 million. Of the remaining 7 creditors, only one is a non-insider scheduled creditor. The Debtor has no employees. (Id. at 2-3.)

The Bankruptcy Court considered the question of venue under 28 U.S.C. § 1412 and Rule 1014 of the Federal Rules of Bankruptcy Procedure. The Bankruptcy Court found that upon liquidation of the personal injury/wrongful death claims, the tort claimants will be "significant players" in the disposition of the Chapter 11 case and therefore their location in Georgia matters. The Bankruptcy Court also stated that discovery and court appearances from the Debtor's former employees who staffed the Georgia location will be necessary. Finally, the Bankruptcy Court noted, but did not find persuasive, Mr. Wolfe's location in the Southern District of Florida and the Debtor's choice of venue. As such, the Bankruptcy Court granted the motion for transfer based on the "interests of justice and the convenience of the parties." (Id. at 3-5.)

On September 28, 2011, the Debtor filed a motion for reconsideration, which the Bankruptcy Court denied. (Order Denying Motion to Reconsider, DE 1.) On October 7, 2011, the Debtor filed a motion for leave to appeal the transfer order and, on October 10, 2011, the Debtor filed a motion to stay the transfer order. On November 1, 2011, the Bankruptcy Court denied the stay motion. (Debtor's Statement of Facts at 2; Costlow's Statement of Facts at 4.)

In moving for a stay pending appeal, the Debtor argues that the Bankruptcy Court erred when it failed to make a determination of whether venue was proper or improper in the Southern District of Florida under 28 U.S.C. § 1408. The Debtor also argues there was no evidence to support a finding that the convenience of the parties and the interests of justice requires a transfer of venue.

II. Legal Standard

In considering a stay pending appeal, the Court must consider: (1) likelihood of success on the merits; (2) irreparable injury to the appellant if the stay is not granted; (3) substantial harm to the appellee if the stay is granted; and (4) whether the public interest is served. In re Micci, 188 B.R. 697, 699 (S.D. Fla. 1995); In re Bob Hamilton Real Estate, Inc., 164 B.R. 703, 705 (Bankr. M.D. Fla. 1994).

III. Discussion

After careful consideration, the Court denies the motion for a stay pending appeal. In so ruling, the Court finds that the Debtor has not shown a substantial likelihood that this Court will reverse the order transferring the case to the Northern District of Georgia. Despite the Debtor's argument to the contrary, the Bankruptcy Court made an implicit finding that venue was proper under 28 U.S.C. § 1408.*fn1 Based on that finding, the Bankruptcy Court properly turned to 28 U.S.C. § 1412*fn2 and Rule 1014 of the Federal Rules of Bankruptcy Procedure*fn3 and concluded that it was in the interest of justice and for the convenience of the parties to transfer the case. Had ...


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