Century Indemnity Company v. Official Committee of Unsecured Creditors et al

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
_____________________________________
CENTURY INDEMNITY COMPANY,
Appellant,
-v- 	8:25-CV-1594 (AJB)
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS et al.,
Appellees.
_____________________________________
Hon. Anthony Brindisi, U.S. District Judge:
ORDER DENYING STAY PENDING APPEAL
Appellant Century Indemnity Company (“appellant”) has moved for an emergency stay
pending appeal of the bankruptcy court’s October 27, 2025 Order granting a motion by appellee
Official Committee of Unsecured Creditors (“appellee”) that permitted non-testimonial “survivor
statements” from sexual abuse claimants in the bankruptcy case below.1 Dkt. No. 3. The matter
was initially assigned to Senior U.S. District Judge Glenn T. Suddaby, but has been reassigned to
this Court for all further proceedings. Dkt. No. 4. Appellee opposes the request for a stay. Dkt.
No. 5. Appellant has replied. Dkt. No. 6.
Federal Rule of Bankruptcy Procedure 8007 governs motions to stay pending appeal of a
bankruptcy court’s order. Although there is a narrow exception for situations in which it “would
be impracticable,” FED. R. B ANKR . P. 8007(b)(2)(A), the Rule requires an appellant to seek relief
from the bankruptcy court before moving the district court for a stay. F ED. R. B ANKR . P. 8007(a),
(b)(2)(B). The Second Circuit has outlined a four-factor test for determining whether to grant a
1 The notice of appeal names other appellants, but they have not participated in the briefing. See Dkt. No. 1.
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motion to stay pending appeal: (1) whether the applicant has made a strong2 showing that he is
likely to succeed on the merits; (2) whether the applicant will be “irreparably injured” absent a
stay; (3) whether a stay will “substantially injure” the other parties interested in the proceeding;
and (4) where the public interest lies. In re World Trade Ctr. Disaster Site Litig., 503 F.3d 167,
170 (2d Cir. 2007) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)).
Appellant moved for relief in the bankruptcy court in accordance with Rule 8007(a). The
bankruptcy court carefully analyzed this four-factor test and denied relief. Ex. 2 to Klotz Decl.,
Dkt. No. 3-3 at 3–5.3 Briefly stated, the bankruptcy court concluded that: (1) appellant failed to
show a likelihood of success on the merits of the appeal, since the October 27, 2025 Order was
consistent with applicable case law, “including decisions of other bankruptcy courts across the
country and across the Northern District of New York”; (2) appellant failed to show irreparable
harm, since the “only arguable prejudice” it had identified was the “speculative” possibility that
the bankruptcy court might be biased by listening to the statements; (3) interested parties to the
bankruptcy proceeding would be substantially harmed by a stay, since “allowing the statements
will enhance the claimants’ engagement with, and confidence in, the bankruptcy process, thereby
increasing the likelihood of their support for the consensual plan of reorganization/compensation
the parties are working to achieve through mediation”; and, lastly, (4) the public interest lies with
permitting the non-testimonial statements “without undue delay.” Id.
Federal district courts enjoy original jurisdiction over proceedings under the Bankruptcy
Code, 28 U.S.C. § 1334, but ordinarily refer those cases to the bankruptcy judges, who act as the
2 The precise formulation of this factor of the test has shifted over time. In re World Trade Ctr. Disaster Site Litig.,
503 F.3d at 170 n.1 (citing Mohammed v. Reno, 304 F.3d 95, 100–01 (2d Cir. 2002)); see also Hirschfield v. Bd. of
Elec., 984 F.2d 35, 39 (2d Cir. 1993) (characterizing this factor as “a substantial possibility, although less than a
likelihood of success”). The important thing to note is that the factors are somewhat flexible, with a strong showing
made on one factor excusing a weaker showing as to another. See Mohammed, 309 F.3d at 101.
3 Pagination corresponds to CM/ECF headers.
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subject matter experts. 28 U.S.C. § 157(a). This judicial district is no exception. N.D.N.Y. L.R.
81.1. Under this arrangement, the district courts have jurisdiction to hear appeals from the “final
judgments, orders, and decrees” of the bankruptcy court.4 28 U.S.C. § 158(a)(1). “Generally[,]
in bankruptcy appeals, the district court reviews the bankruptcy court’s factual findings for clear
error and its conclusions of law de novo.” In re Charter Commc’n, Inc., 691 F.3d 476, 482–83
(2d Cir. 2012) (citing FED. R. B ANKR . P. 8013).
Measured against these general legal standards, appellant’s motion for a stay pending its
appeal will be denied. Where, as here, a matter is within the discretion of the bankruptcy court,
the district court generally reviews the decision for an “abuse of discretion.” Cap. Commc’n v.
Boodrow, 126 F.3d 43, 47 (2d Cir. 1997); In re Regan, 2022 WL 1775713, *3 (N.D.N.Y. June 1,
2022) (Sannes, J.) (applying this standard of review to bankruptcy court’s denial of stay pending
appeal). “A party seeking a stay of a lower court’s order bears a difficult burden.” United States
v. Private Sanitation Indus. Ass’n, 44 F.3d 1082, 1084 (2d Cir. 1995).
Appellant has not carried this burden. In an attempt to establish error in the challenged
Order, appellant’s motion to stay works overtime to distinguish the procedural postures in which
other bankruptcy courts (in this jurisdiction and others) have permitted the same (or substantially
similar) non-testimonial statements. Briefly stated, appellant contends there is “a split of views
among bankruptcy courts” on the issue of whether, and if so, at what point in the proceedings, to
hold these hearings. Dkt. No. 3 ¶ 26.
4 Alternatively, the district courts may grant leave to appeal “from interlocutory orders and decrees” issued by the
bankruptcy court. 28 U.S.C. § 158(a)(3). Appellant contends that its appeal of the bankruptcy court’s October 27,
2025 Order is proper under either provision, but has sought leave to appeal to the extent it might be necessary to do
so. Dkt. No. 2 ¶ 5. Appellee has not squarely addressed this argument, since its brief is focused on the propriety of
the stay request. See Dkt. No. 5. Accordingly, the Court reserves decision on this issue pending further briefing, to
the extent it might become warranted.
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But as appellee points out, appellant’s argument hardly establishes that there is a “split”
of views on these statements. Dkt. No. 5 ¶ 17. The fact that another bankruptcy court presiding
over another bankruptcy case involving another diocese has elected to permit these statements at
another juncture in the bankruptcy proceedings, perhaps using a different procedure—one that
appellant might believe to be preferable—does not justify a stay.
Appellant’s argument on this claimed split leans heavily on a clipped quotation from U.S.
Bankruptcy Judge Meredith S. Grabill, who is presiding over a diocesan bankruptcy case in the
Eastern District of Louisiana. See Dkt. No. 3 ¶ 26 (“I’m more concerned with . . . the intent to
persuade the factfinder, to persuade me . . . .” (emphasis omitted)); Dkt. No. 6 at 2–3 (quoting
same). But considered in context, the selected quote loses a bit of its punch:
But I’m more concerned with, you know, the intent to persuade the
factfinder, to persuade me outside of, outside of any context where
it would have real effect or meaning or purpose without the other,
you know, litigation safeguards that come with, you know, an
evidentiary hearing or a trial.
In re The Roman Catholic Diocese of Ogdensburg, New York, No. 23-60507-6-PGR, Dkt. No.
1083-2 at 5–6 (N.D.N.Y. Bankr. Oct. 14, 2025) (emphasis added). Further, although only a short
excerpt of the transcript of the proceedings before Judge Grabill is available, a review of the rest
of that document confirms that the bankruptcy court was “onboard” with providing “a forum for
those who want to speak,” albeit in a different procedural posture. Id. at 5–7.
Even assuming that Judge Grabill’s observations were somehow enough to establish a
“split” of views, the Court would reject the notion that a mere split of bankruptcy authority is
anywhere near enough to justify a stay of the October 27, 2025 Order. That is particularly so
where, as here, an independent review of the four-factor test leads to the conclusion that a stay
would be unwarranted.
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For one thing, appellant’s claim of irreparable injury is speculative, resting on counsel’s
subjective belief that hearing the non-testimonial statements will create bias or the appearance of
bias that might result in the bankruptcy court’s impartiality being called into question at a later
date. Not so. And certainly not necessarily so for the purpose of this stay. “Courts are perfectly
capable of assessing facts and the law notwithstanding the sympathetic or unsympathetic nature
of a particular litigant.” Dkt. No. 5 ¶ 20. As the bankruptcy court observed, “any concern about
potential prejudice . . . is speculative and, should it arise, can be raised by a concerned party via a
recusal request as to the matter in question.” Ex. 1 to Klotz Decl., Dkt. No. 3-2 at 11.
For another, appellant all but ignores the fact that a stay would substantially injure other
interested parties: the survivors themselves, some of whom have waited a good long time for the
chance to be heard on the most sensitive of topics. The bankruptcy court reasonably concluded
that these non-testimonial statements were likely to “increase the prospects for a consensual and
expeditious resolution in this case.” Ex. 1 at 12; Dkt. No. 5 ¶ 24 (emphasizing that debtor will
almost certainly need non-debtor releases to secure plan confirmation). Indeed, the bankruptcy
court’s October 27, 2025 Order thoughtfully balances a fairly challenging set of considerations
while staying mindful of its own role in the bankruptcy process. In re Roman Catholic Diocese
of Ogdensburg, New York, 2025 WL 3007785 (N.D.N.Y. Bankr. Oct. 27, 2025).
One more thing. Appellant acknowledges—as it must—that the other bankruptcy courts
presiding over their own diocesan bankruptcy cases seem to have permitted these statements in
some form or another. So appellant’s emergency stay petition boils down to the assertion that
there is something particularly erroneous about the choice made here. The Court does not find
this argument persuasive, not even a little bit. Instead, the Court agrees with appellee’s view:
Non-testimonial statements are merely statements. 	The survivors
are not serving as fact witnesses in the proceeding. 	No [s]urvivor
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statement may be used for any purpose because it will not be
recorded. Every substantive right for every party with respect to any
factual testimony at a later point is preserved. 	No survivor is
required to make a statement. If a survivor later testifies as to the
specific facts of their case, the survivor may be cross-examined.
Dkt. No. 5 ¶ 18.
In sum, after carefully reviewing the bankruptcy court’s analysis in the challenged Order
and examining appellant’s arguments to the contrary, the Court concludes that the application of
the four-factor test does not warrant a stay in this scenario. Accordingly, appellant’s motion for
a stay pending appeal must be denied.
Therefore, it is
ORDERED that
1. Appellant’s emergency motion to stay (Dkt. No. 3) is DENIED.
IT IS SO ORDERED.
Dated: November 26, 2025
Utica, New York
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