In Re: CWS Enterprises, Inc.

Filing 48

STIPULATION and ORDER signed by Judge Kimberly J. Mueller on 12/19/2014 ORDERING the Order and judgment shall be STAYED pending appeal, without the posting of a supersedeas bond. The Motions for Stay shall be taken off calendar. (Donati, J)

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BENBROOK LAW GROUP
BRADLEY A. BENBROOK (SBN 177786)
400 Capitol Mall, Suite 1610
Sacramento, CA 95814
Telephone: [phone]
Facsimile: [phone]

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DLA PIPER LLP (US)
DAVID A. CHEIT (SBN 121379)
400 Capitol Mall, Suite 2400
Sacramento, CA 95814
Telephone: [phone]
Facsimile: [phone]
Special Counsel for Appellee and
Cross-Appellant David Flemmer,
Chapter 11 Trustee

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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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In Re CWS Enterprises, Inc., a California
Corporation,

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Case No.: CIV S-12-0142 KJM
Bankr. Court Case No. 09-26849-C-11

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Debtor,
______________________________________

Adv. Proc. Case No. 10-02226-C

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Spiller McProud,

STIPULATION AND ORDER FOR STAY
PENDING APPEAL

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Appellant,
v.

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CWS Enterprises, Inc., a California
Corporation, David D. Flemmer, Chapter 11
Trustee, and Charles W. Siller,

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Appellees.
______________________________________

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And consolidated appeals and cross-appeals

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STIPULATION AND ORDER FOR STAY PENDING APPEAL
Case No. CIV S-12-0142 KJM

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RECITALS
1.

This Court entered an order on September 17, 2014, and a judgment on September

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30, 2014 (the “Order and Judgment”), in the above-referenced appeal from the bankruptcy court

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(the “Bankruptcy Case”). CWS Enterprises, Inc. (“CWS”) has commenced an appeal of the Order

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and Judgment to the Ninth Circuit Court of Appeals.

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2.

Under the Third Amended Plan of Reorganization (the “Plan”) confirmed in the

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Bankruptcy Case, claimant Spiller McProud (“Spiller”) maintains deeds of trust on multiple

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properties owned by CWS to secure any payment owing to Spiller following resolution of appeals

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relating to its claim (the “Deeds of Trust”). The Plan further provides:

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In the event the Class 2.6.b Claimant [Spiller] prevails on its appeal or appeals
or the final allowed claim is established by compromise, and the final allowed
amount of its claim is determined to be in excess of the amount of the Interim
Payment, the excess amount shall bear interest at 4.0% per annum from the
Petition Date until paid in full. Trustee/Plan Administrator shall use his best
efforts to pay in full the excess amount plus interest within 6 months following
entry of the order finally determining the Class 2.6.b Allowed Claim.

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3.

CWS and Charles Siller subsequently filed a motion for stay pending appeal,

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without the posting of a supersedeas bond, of the Order and Judgment. They argued in the motion
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that the Deeds of Trust were adequate security in lieu of a bond. Spiller opposed the motions,
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expressing its preference for a more liquid form of security.
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4.

The parties have agreed to compromise the dispute as set forth below.

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STIPULATION
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The Order and Judgment shall be stayed pending appeal, without the posting of a
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supersedeas bond, on the conditions set forth below:
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1.

In the event the final resolution of the appeal (and any remand) involves further

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payment to Spiller on its claim in the Bankruptcy Case, the interest on such payment shall
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increase, effective September 17, 2014, from 4% (as provided in the Plan) to 7% per annum.
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2.

CWS shall maintain $3 million as security for payment of any sums due to Spiller

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in either of the following forms (or in combination, provided that the total amount of such security
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shall be $3 million): (a) available borrowing under its existing line of credit, the limit of which is
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-1STIPULATION AND ORDER FOR STAY PENDING APPEAL
Case No. CIV S-12-0142 KJM

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being increased from $2.5 million to more than $3 million), and/or (b) cash in a blocked account.

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As an example, if CWS deposits $500,000 in a blocked account, its obligation to maintain

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available borrowing under its line of credit shall be reduced to $2.5 million. Spiller will cooperate

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with CWS in establishing any such blocked account. If such an account is opened, CWS will

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provide account statements on a quarterly basis to Spiller.

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3.

At such time as CWS confirms to Spiller that it has $3 million in security through

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either or both of the forms described above, Spiller will reconvey the Deeds of Trust to CWS. In

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the event any of the properties encumbered by the Deeds of Trust are required as security by

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CWS’s lender for the increased line of credit, Spiller will cooperate with CWS to facilitate the

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transfer of such security. CWS shall establish such $3 million in security by January 30, 2015.

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4.

CWS shall provide quarterly financial statements to Spiller.

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5.

Upon final entry of any order, following all appeals, that CWS must make

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additional payment on Spiller’s claim in the Bankruptcy Case, such payment shall be made within

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30 days of such order.

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Dated: December 19, 2014

BENBROOK LAW GROUP, PC

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By /s/ Bradley A. Benbrook
BRADLEY A. BENBROOK
[e-mail]
Attorney for David Flemmer, Trustee

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Dated: December 19, 2014

DAHL LAW
By /s/ Walter R. Dahl
WALTER R. DAHL
[e-mail]
Attorney for Spiller McProud

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-2STIPULATION AND ORDER FOR STAY PENDING APPEAL
Case No. CIV S-12-0142 KJM

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ORDER
1.

The Order and Judgment shall be stayed pending appeal, without the posting of a

supersedeas bond, on the conditions set forth in the Stipulation above.
2.

The motions for stay filed by CWS and Charles Spiller shall be taken off calendar.

DATED: December 19, 2014.

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UNITED STATES DISTRICT JUDGE

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-3STIPULATION AND ORDER FOR STAY PENDING APPEAL
Case No. CIV S-12-0142 KJM