Securities Exchange, et al v. Mutual Benefits Corp, et al

Filing 3157

ORDER granting 3145 Acheron Capital, Ltd.'s Expedited Motion to Stay Pending Appeal of Order 3142 . Signed by Judge Federico A. Moreno on 8/29/2022. See attached document for full details. (mmd)

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 1 of 8

UNITED STATES DISTRIUT COURT FOR T1!2
SOUTHERN DISTRICT OFFLORD A
M iamiDivision
Ca#eN ttl ber:04-60573-CIV-M ORtNO

sycuklrlEsAND EXCIiANGE
COMM ISSIUNjetal.,
Plaintiff,
Vs.

M UTUAL BENEPI'FS COItP.etal.,
Defendahts.

ORDEk GItANTIMG ACHERON CAPITAL.LTD.':ZXPEDI:Eb M OTION TO STAY
PENDING APPEAL OF ORDER (D.E.3142)

AthetonCapital,Ltd.sççksastayjendingappealoftheCourt'sOrdèrAdoptingReport
and Recommendation and Granting theTrustee'
è
sMotion to kppmveProceduresforSale of
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PolicieàinColmectibhwiththe'frtlstTerminqtibn(D.E.314i).TheCourtfindsthestatzdardfot
astay pendipg appealism et.
.

THIS CAUSE cnme befète the Courtupqn Expedited M otioh to Stày Pending Appeal
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(D.E.3145),filedonJulv 4,.
2022.
TI-1E COURT has considered the motion,the responje,the pertillent portions of the
,

record,andbeillg bthètwikefully advised ifltheprem isel,itis
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ADJUD GED thatthe m otion is GRANTED .Pending appellâte tdyiew,the Courtstays

theOrderAdoptihgltepottandRecommendationand GrahtingtheTitistee'sM otiontoApprove

Prpcedures.
for Sâle ofPoliciesin Cunnéction with the '
trustTermihation (D.E.3142)to the
.

.

extentitallpwstheTrtlsteetos411ycheron,Truéts,interestsinthe.
ue:p pf)jjoju .

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 2 of 8

1.

Backuround

AcheronCapital,Ltct.lmovektostaythesaleofthepoliciesinwhichAcherohTrusts
ow ns a fractionaliùterest.Specifidàlly,AcheronseekstostaytheJune29,2022postjudgment
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Order(thèSisaleProceduresOrder''),which adoptedtheApril9,2022 Reportand
Recom mèndation éranting theTrustee'sJarmaty 21,2022 m otion.'Iihe SaleProcedurù:Orderis
currently ön appealand on July 29,2022,the Eleventh'Circuitissued an ordergranting
Acheron'sM otion to Expeditetheappealand setting atlexpedited briefing schedule.

ThisisnotthefitsttimetheCourthasconsideredastay ofanorderin thispoétjudgment
pm ceeding.In 2021,theCourtgranted Acheron'sm otion to stay itsInstrttctipnsOrderpending
x

appeal.ln thatappeal,theEleventh Circuitdidnotreach them eritsbecaujeitdeterminedthe

InstnzctionsOrderwainotan appealablefinalorder.Acheron Capital,Ltd v.M ukamal,22

F.4th979,991(11thCir.2022)(MBC .
J.J.J).Notably,theEleventh Circuitatzticipatedthat.
Acheron cöuldprotectltsinterestby awaiting entry ofGithefinalapprovalofthesale''order,then

àeeking expeditedreview andastayofthesale,pendihjresolutionofthatlaterappeal.f#.Atthe
oralargum eht,ChiefCircuitJudgePryorobserved thatasubsequentappealcould betaken once
çlyotlgeteverything ready to be teed up fora sale,butthe sale itselfhasnittalcen place to m oot

theappeal,andthenwecanreview zverything.''JudgeGrantalsocontemplatedthatççtheorèer
approving thesalewillsay,thejalewillgoforwardunderthese conditi6nsand requirem ents,
period.Itwillnotsay the salethathappened yesterday,Iapprove,''rather,'theSçapprovalitself'
willhappen beforethe sale,itapprovesthenature öfthesale,ptherthan thepajtoccurrenceof
the sale.''ln itsw rittçn opinion,the Eleventh Circuitfound thatA cheron'sconcern thatGsçatl

appealwillbetoo late'atthatpointbècausethe salem lghtoccurbeforetlzigCourtcantesolve

1A cheron Capitél,Ltd.istheInvestm entM anagerforA cheron PortfolioTrust,A vernusPortfolioTrust,Lorenzo

Tonti2006TrustandSTYX Portfolio'
Frutt(thedçAcheronTrusts''),

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 3 of 8

theappeal...istmfounded''becauseçcgtjhisCoul'tmay expeditealaterappeal,asitdidthis
appeal.''çdAcherop doesnotexplain why an application - in thisCoul'
torin the districtcourt- to

stay an orderapproving thefinalsale would notsuftkiently protectitsinterests.Indeed,the
districtcourthasalready granted astay oftheInstructionsOrderçto theextentitallowsthe
Trusteeto sellAcheron Tnlsts'fractionalintetestsin theKedp Policies.W ehaveno reAson to
supposethatthe districtcourtwould change itsposition atld delly a stay afteritsapprovalofthe

sa1e.''J# at991.

TheSale PtoceduresOrderisnow on an expedited appeal.ItapprovestheTrustee's
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requestto sella1lofthepoliciesheldby theTrustusingthesgleconditionsandprocedures
requested by theTrustee.The audioh isscheduled forSeptember13,2022.On appeal,Acheron

ischallenging theSaleProceduresOtderon the ground'thatthe saleviolatesitscontracm alrights
undertheAssetPurchaseAgreqm ents,andtheparties'2015 Agreem ent.Acheron appealed the

SaleProceduresOtderj)nJune30,202i.Inthisexpeditedmotionforstay,itclaimsthatthe
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auction w illm ootitsclaim on appealthatthe Sale Procedttres Ordet violatejits cohtrécfual

rightsby selling policieswhereAcheron ownsfractionalinterelts.

In respondinj tpthem otion to stay,theTnlstee arguestheSaleProceduresOtder
requiresseveralstepsto occurbetween SaleProceduresOrderand the finalTrustliquidatioù.In
hisview ,thegeprocesses'rendertheéppealprematurefèrlack ofa finalörder.Theprocesses

include:(i)separatingpoliciesinto separatetranchesatauction?(ii)solicitihgstalkinghorsebids
priortotheauction,(iii)implementingvariousbiddingprocedureslikeprpvidingprospective

plzrchasersat'
lopporttmitytoconductduediligence;(iv)establishingcriteriaforidentifying
qualifyingbidders;(v)conductinganauction foreàchtrancheofiheKeepPoliciestodetermine
the highestand bestbidj;(vi)'
schedulingafuture(GsaleApprbvàlHearing''toocctlraftetihe
.

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 4 of 8

conclusionoftheaction;(vii)entryofaçûsaleofApprovalOrder,''whichwouldapprovethesale
ofeachtranchetothehighestandbestbidder,(viii)paymentoftheexpensesofthesaleprpcess
from theultimatesalesproceeds;and(ix)distributingproceedsin amnpnertobedetermined
followingthe sale.Id at5-7.TheTrusteellp vesto dism isstheappealforlack ofappellate

jurisdiction agàinassertingtheappealispremétureandtheSaleProced.tlresOrderisnotatsnal
appealable ordez'.
lI.

LezalA halvsià

lElAjspartofthet'raditionàlequiplnentfortheadministration ofjustice,afederalcoul't
canstaytheenforcementofajudgmentpendingtheoutcomeofan appeal.''Nkenv.Holder,556
U.S.418,421(2009)(quotingScrtps-HovlardRadio,Inc.v.FCC,316U.S.4,9-10(1942(
9.
Acheron seekstopmservethestatusquowith astay pending appealofthe Court'sSale
ProceduresOrder.'
A cheron claim sthatiftheTnlsteesellsitsfractionalinterestsin theKeep
Policies,itwillb:irreparably harmed.(çA stay doeshotm aketime stand still,butdoeshold a

l'
uling in abeyanceto allow an appellatecourtthetim enecessary to rèview it.''Nken,556U .S.at
421.

Rule62(b),substantivelyamendedin 2018,providesinpertinentpart:
Stay by Bond or 0 therSeclzrity.Atanytimeafterjudgmentisentered,a
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party m ay bbtain a stay by providing abond nrothersecurity.'
Vhe stay .
takes'effectwhen the courtapprovesthebohd orothersècurity atld
remainsin effectforthetim especified in thebond orothersecurity.

Fed.R.Civ.P.62(b)(2021).
Thestandardfottr-parttesttodetel-mineastayrrquirescourtstoconsider:(1)whetherthe

stayapplicanthasmadeastrong showingthatheislikelytosuqceedonthemerits;(2)whether
theapplicantwillbeirrepazablyinjm edabsentastay;(3)whetherissuanceofthestaywill

substantially injuretheotherpartiesinterestediptheproceeding;and(4)wherethepublic

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 5 of 8

interestlies.f#.,556U.S.at4111.(quotingHiltonv.Braunskill,481U.S.770,776(1987)))
Garcia-Mirv,M eese,781F.2d 1450(11th Cir.1986).Notably,theGarcia-Mircaseclarifesthat
(<

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g m ovantm ay also havehism otion granted upon alessershowing ofa çsubstantialcaseon the '

merits'whenSthebalanceoftheequitiesEidentifiedinfactors2,3,and.'
q weighsheavilyin
favorofgranting the stay.''Id at 1453.
Four-partTest

TheEleventh Circuithasrecognizedthattigranting a stay thatsimply maintainsthe statlz:
quopending appealçisappropriatewhen a seriouslegalqudstion ispresented,when littleifany

hal'm willbefallotherinterestedpersonsorthepublicandwhendenialofthegstayqwouldinflict

irreparableinjuryonthemovànt.'''fabM D,V c.v.Fed TradeComm 'n,678F.App'x816,819
(11thCir.2016)(quotingRuizv.Estelle,650F.2d555,565(5th Cir.1981)).
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1:Factor1:SubstantialLikelihoodofsuccens
Garcia-M irallowsamovahtforasta#toshow a(ssubstantialcéseonthemerits''when

theharm factorstipinfavorofastay (asisthecàsehere).Garcia-M ir,t81F.2dat1453;A 7:C.
v M ainstream Af/cfg.Servs.Inc.,345F,3d850,852 (1.
0thCir.2003)(GiW ithrespecttothestay
factors,wherethemovingparty hasestablishedthatthethree Gharm 'factorstip decidedly in its

favor,theiprobabilityofsuccess'requirementissomewhatrelaxed.'').Thepartiesdispute

whethertheSalePröcedlzresOrderisafinalappealableorder.IhMBC i11,theElevehthCircuit
statedthatçsgbllzlyafterthedistrict.courtapprovesthesttlewilltherebeafinaldecisioh.Atthat
point,a11disputesaboutthesalewillbetconcludedandclosedg.j'''MBC 1IL 22F.4that988
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(citingCohenv.Benehtialfntfzhu
t'foan Corp.,337U.S.541,546(11498).Theoralargumentin
M BC I11 suggeststhatthe Eleventh Circuitw as concerned aboutthe tim ing ofthe appealofthe

meritsinthispostjudgmentproceeding.Thequesyionscontemplatedthatthefinalappealable
orderapproving thesalewouldpredatethe actualsale.JudgeGrantdescribedthefinal
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Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 6 of 8

appealablesaleorderasone çiapprovingthenatureofthesale, ratherthan thepastoccunypce of
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thesale.''TheSrleProceduresOrderonappealdoesjustthat.ltsetsforth theparnmetersforthe
auction.Thatbeing said,theCourtunderstandstheTrustee'sargllm entthatthere may yetbe

anotheropportunity forAcherontoobjecttothesalebeforethisCourt,aftertheauctiontakès
place,and beforethisCourtgrantsfinalapprovalofthesale.TheTrusteeaddsthatthe Court
m ustissueitsfinalapprovalbeforethepartiescan close on the saleofthepolicies.Thispoint,
however,isalso contestedby Acheron,which arguesthattheprocessapproved by theSale
Procedures orderiscapableofimmediateexecution.Becausethereisasubstantialdisputeon
.

themeritsasto whetherthisSalePtoceduresOrderisafinalappealableordercapable of

imm ediateexecution,the Courtfindsthatthe GarciazM ir standard ism etand astay iswarranted.
2.Factors274.
.TheHarm Factors
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Thù harm factorscenteron therelativeharm to Acheron,theTrustee,and the public.

Acheronarguesthatitwillbeirreparabtyhârmedifnostàyisimposed.Itarguesthatitowns

overà0% oftheTrust'sholdings,whicùithaspaidmilliozjsofdollarstopumhaseanbmâintain
overthelast13years.This/ourthaspyeviouslyrecognizedthattçthisisnotasimaticnwhere
Acheron cap silhply sueto recoverforbreach ofcontract.wherethèreisa Courtorder

authörizingthesale.Rather,Acheroh claim sitsrisk oflôssisthevâlue ofthepoliciestm

maturity- aremedy thqtwould beunavailable shouldthepollciesbesold beforetheCourtof

Appealsreviewstheissue.''(D.E.3014 at7).
TheCottrtmugtthenanalyzetheinjurytcitheotherparties.TheTrusteearguesthatastay
would causethevictim investorstu sufferurmecegsary harm becausethey willberequired to

continuefundingpremium obligationsanddelay distributionofshares.TV Trusteeclaimsthat
the ehd-goalofthewind down mld terminatign procèsscould llnravelduring astay.Specifically,
.

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 7 of 8

hestatesthattheçlstalking horse''bidsnegotiated by theTrusteedo no$rem ain open indefinitely,
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butm ay tenninateifaclosing doesnotoccurby aspecised deadline.Although certainly the

Trusteehasarticulated pptentialrisksoflosingbidsandthetermination processum avùling,these
arerisksand notascertain as'thehann asAcheron faceswhen the salem aterializes.Indbed,the
Tnlstde'sbriefcouchestheharm to theTnlstaspotential- nçcould be catastrophic,''thestalldng
horsebidsSçmay terminate,''thewind-down processalldterm ination pm cessçlcould ..,llnravel.''

Accordingly,thebalanceofequitiesfavorsastay atthisjunctlzre.Duringthecourseofthegtayj
therfrusteeis9eeto m oveto m odify itshould theseharmsbecom eim minent.
Theûnalfactoristhepublicinterest.TheTrusteearguesthepublicinterestisnotserved

by allowingAcherontostay anorderpendinganappealwherethereisnoappellatejurisdictiolt

BecausétheCourthasfoundthereisa,substantialissueonthemetitsa.
stowhetherthejale
ProceduqesOrderisafinalappeâlableordetcapableofimme'
dlateexecution,theCourtdoesnot
agreewiththeTrustee.A stay to allow appellate review in aèasewheretheEleventh Circuit
allow ed expedited briefing isprudùht.
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Having found the factorsfavbra staypending appeal,the Courtnextturflstotheissue of

securitytmdçrRule62(b).
Bond

TheTrulteerequestsabondpendingthestaykRule62(b),substantively amendedin
2018,alloWsapartyto obtain a stay by providinga bond orsom eothersecurity.Fed.R.Civ.P.

62(b)(2021).The2018amendmenttoRule62(tmakesexplicitiheopportunitytopost'
security'ih

thefonnotherthàn abond.''Fed.R.Civ.P.62(b)(2018committeenote);DeutscheBankNat1
Tr.Co.asFr.forGSWW Hoineft
.
g?zfl
.p/r.,2006-18v.Cornish,#59F.App'x.503,510(7thCir.
2019)(notihgamendmentprovidesgreaterflexibilityin grantihgstayspendingappeal,especially

incontextofjudgfnentsthatarenotpurely monetary).
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h

Case 0:04-cv-60573-FAM Document 3157 Entered on FLSD Docket 08/29/2022 Page 8 of 8

ThisCourtpreviously fôtmdthatAcheron'sinterestsin.thepoliciesheld in theTrtzst

served asadequatesecurity.Should theEleventh Circuitaffirm the SaléProceduresOrder,the
Tnlsteecan apply Acheroh'ssaleproceedsto the extra cosjsincurred from a delayed sale.
D uring the ldngth ofthe appeal,the Tnzstee m ay seek the Cout'trevisitthe
'conditions ofthe stay

iftheimpactto the Trustism :grlitèed.frrheTrusteem ay alsontovefora specificbond am ountif
there is'a specitic lossto the Tnlst.

DON E AND ORDERED in ChambersatM imni,Florida,this

ofAugust2022.

<

FEDE o . Rsxo
IJNITED sTATcsplsr
rlttc'rJuoos
.

Copiesfulmished to:
CounselofRecord

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