Bankruptcy Stay of Land Deal Spat Heads to High Court

WASHINGTON (CN) – The U.S. Supreme Court took up a bankruptcy snarl Monday stemming from an aborted $1.55 million real estate deal.

When the sale fell through, Tennessee-based developer Ritzen Group Inc. accused Jackson Masonry of breach of contract, while Jackson  said the fault was Ritzen’s for not securing funding by the closing deadline.

Before the case went to trial, however, Jackson filed for Chapter 11, leaving Ritzen to pursue relief in bankruptcy court. Ritzen filed a series of unsuccessful appeals after that effort failed, making its latest bid this past January with the U.S. Supreme Court.

Represented by Nelson Mullins attorney William C. Wood Jr., Ritzen asked in its petition for certiorari whether the bankruptcy court made a final order in refusing to grant Ritzen relief from the automatic stay of litigation that Jackson’s bankruptcy caused. 

“In diverting from this court’s prior precedent, and in conflict with the First and Third Circuit Courts of Appeal, the Sixth Circuit ruled that an order denying relief from the automatic stay is per se final,” the petition states.

Per its custom the Supreme Court did not issue any comment Monday in taking up the case.

In an opposing brief, attorneys at Dunham Hildebrand and at Schulman, Leroy & Bennett argued that no split exists: “it is a distinction without a material difference.”

“This reality is evidenced by the fact that [Ritzen Group] only cited cases in which the alleged circuits in conflict agreed that denials of stay relief in the subject cases were actually final and appealable orders,” the brief states. “[The management company] does not cite to a case in which a circuit court has determined that a denial of relief from the automatic stay was a final and appealable order.”

But attorney William said the split is real.

“This issue extends beyond the question of stay relief and goes to the core of the Bankruptcy Case itself,” his petition for certiori states. “The Denial Order did not resolve this underlying issue. As such, the purported ‘finality’ of the Denial Order is impacted, because [Ritzen Group] could still challenge the validity of the Bankruptcy Case, as a whole, on good faith grounds even after entry of the Denial Order.”

Ritzen’s is the only case granted certiorari this morning, in a tide of denied petitions. The court has not yet scheduled oral arguments.

Attorneys for Ritzen did not return a request seeking comment.

The law firm Schulman, LeRoy & Bennett declined to comment. Jackson Masonry’s lead counsel Griffin Dunham has not returned an email seeking comment.

This story is developing…

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