In Re: 45 John Lofts, LLC

Filing 23

ORDER terminating 22 Letter Motion to Stay re: 22 LETTER MOTION to Stay re: 21 Letter, 20 Order on Motion to Stay,, and/or seeking clarification in support of stay, addressed to Judge Mary Kay Vyskocil from Brendan Kombo l dated 11/28/2023. The Court will entertain a renewed motion to stay upon Defendants-Appellants' procurement of a $3 million appeal bond. The Clerk of Court is respectfully requested to terminate docket entry number 22. SO ORDERED. (Signed by Judge Mary Kay Vyskocil on 11/28/2023) (tg)

Kombol Law Group, P.C.
340 Atlantic Avenue, Brooklyn, NY 11201
Tel. [phone]

Honorable Mary Kay Vyskocil
United States District Court Judge
United States District Court
Southern District of New York
500 Pearl Street
New York, New York 10007
Re:

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 11/28/2023

Chaim Babad, et al., v. 45 John Lofts, LLC
Case No. 23-cv-5357 (MKV)

Dear Judge Vyskocil:
We represent the defendants-appellants Chaim Babad and Congregation Kahal Minchas
Chinuch (“Appellants”), and write to request clarification of the Order, entered yesterday, denying
without prejudice the Appellants’ motion for a stay pending appeal [ECF doc. 20], and to briefly
respond to the letter submitted by Eric Snyder, Esq., counsel for the plaintiff-appellee 45 John
Lofts, LLC (the “Debtor” or “Appellee”). The Order terminated a temporary stay granted in the
Order to Show Cause dated November 20, 2023 [ECF doc. 18] and the hearing that was scheduled
for Friday, December 1.
The Order states: “Under Rule 62(b), ‘a party may obtain a stay by providing a bond or
other security’ at ‘any time after judgment is entered.’ The stay ‘takes effect when the Court
approves the bond or other security.’ Fed. R. Civ. P. 62(b). That is to say, the appellant is entitled
to a stay as a matter of right upon receiving judicial approval of the bond. …” (emphasis in
original), and that “[c]ourts have found funds restrained in a bank account to be a valid form of
security under FRCP 62(b).” The Order then provides: “Defendants may renew their motion upon
proof of a $3 million bond. If Defendants are able to secure a $3 million bond, Defendants are
directed to file proof on the docket. The Court will thereafter enter a stay.”
The Appellees seek clarity of whether a $3 million appeal bond is the only security the
Court will accept before entering the stay, or whether, consistent with the language of FRCP 62(b)
and case law the Appellees may rely on funds of the Congregation in the amount of $2,341,194.76
currently restrained by Flagstar Bank, N.A. (see Exhibit 1), provided that the Appellees deposit an
additional $658,805.24 into a secure account to bring the total cash collateral to $3 million. The
Appellees are prepared to do either immediately and file proof on the docket.
Turning to Mr. Snyder’s letter, it appears to be an informal motion for the Court to
reconsider and vacate the Order to the extent the Court is prepared to grant the stay under FRCP
62(b) once the security is in place. The Court was quite clear in the Order that it would grant the
stay under Rule 62(b) and declined to enter a discretionary stay under Bankruptcy Rule 8007. The
Debtor argues, nonetheless, that Appellants must still satisfy the standards of Bankruptcy Rule
8007 to obtain a stay, and points to alleged hardship that the Debtor’s equity holders will suffer if
they have to wait any more time to be paid.

This is a particularly misplaced fact for this Court to consider. Seven years after the Debtor
filed for chapter 11, it has still not proposed, much less confirmed a plan of reorganization, yet the
bankruptcy case docket reflects that the Debtor has paid all of its creditors and has obtained
approval twice from the Bankruptcy Court to make distributions to equity. This Debtor does not
belong in chapter 11, and the failure to confirm a plan is cause for the case to be dismissed. See
11 U.S.C. § 1112(b)(4)(J). The Appellants will be filing a motion to dismiss the bankruptcy case
which, if granted, could reinstate the transfer to the Congregation that was avoided and vacate the
judgment that is the subject of the pending appeal. See 11 U.S.C. §§ 349(b)(1)(B) and (b)(2). It
would be particularly egregious if the Debtor were able to execute on its judgment and obtain
turnover of the restrained funds under these circumstances before all of the extant issues are
resolved. An appeal bond or cash collateral will protect all parties in interest.
The Appellees will procure either a $3 million appeal bond as reflected in the Order, or if
permitted, supplement the restrained funds to bring the total cash security to $3 million. We
therefore respectfully ask that Appellee’s request to reconsider and vacate the Order be denied.
Thank you for your consideration.

Respectfully,

Brendan C. Kombol
Cc: All Parties via ECF

The Court will entertain a renewed motion to stay upon
Defendants-Appellants' procurement of a $3 million
appeal bond. The Clerk of Court is respectfully requested
to terminate docket entry number 22. SO ORDERED.

11/28/2023