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Order Filed on September 12, 2025

by Clerk

U.S. Bankruptcy Court

District of New Jersey

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW JERSEY

In Re:

ARP HOSPITALITY GROUP LLC, Case No.: 29-1794]

Chapter: 11

Debtor. Judge: John K. Sherwood

DECISION AND ORDER RE: DEBTOR’S EMERGENCY MOTION TO STAY

NATIONAL LABOR RELATIONS BOARD UNFAIR LABOR PRACTICE HEARING

The relief on the following pages, numbered two (2) through six (6), is hereby ORDERED.

DATED: September 12, VE Ff)

2025

Honorable John K. Sherwood

United States Bankruptcy Court

Case No.: 25-17941

Caption: DECISION AND ORDER RE: DEBTOR’S EMERGENCY MOTION TO STAY

NATIONAL LABOR RELATIONS BOARD UNFAIR LABOR PRACTICE HEARING

Facts and Procedural History

Chapter 11 Debtor ARP Hospitality Group LLC d/b/a Fairfield Inn & Suites Paramus

(“Debtor”) filed an Emergency Motion to Stay a National Labor Relations Board (“NLRB”) Unfair

Labor Practice Hearing (“the Hearing”) scheduled for September 16, 2025. The Debtor requests a

30-day stay due to the bankruptcy proceeding. The Debtor seeks this stay to provide time for the

Debtor’s court-approved accountant and business consultant, Thomas Colitsas, to recover from a

severe illness, preserve the status quo, and provide the Debtor with a “breathing spell” so that the

Debtor can engage in settlement talks with the Hotel and Gaming Trades Council, ALF-CIO (“the

Union”). [ECF No. 45]. The Union and the NLRB object to the Debtor’s motion to stay the

Hearing, contending that the Hearing is not subject to the automatic stay because the issue to be

tried before an Administrative Law Judge (“ALJ”) relates to the police and regulatory powers of a

federal agency. [ECF Nos. 56, 59].1

The Debtor purchased the Fairfield Inn & Suites in Paramus, New Jersey (“the Hotel”)

from the Shaner Hotel Group d/b/a The Fairfield Inn & Suites Paramus (“Shaner”). Shaner and the

Union were parties to a collective bargaining agreement (“the CBA”) that expired on November

30, 2023. The Debtor began operating the Hotel on January 4, 2024. The Union filed its Unfair

Labor Practice Complaint against the Debtor on June 2, 2025, approximately a year and a half after

the events giving rise to the claims in NLRB’s Complaint occurred. The Debtor filed its Answer

1 The NLRB and the Union have also argued that the relief requested by the Debtor should have been

brought in an adversary proceeding as opposed to a motion (Bankruptcy Rule 7001). Though this argument

has some technical merit, it does not justify denial of the motion given the limited relief sought and the

emergent circumstances.

Case No.: 25-17941

Caption: DECISION AND ORDER RE: DEBTOR’S EMERGENCY MOTION TO STAY

NATIONAL LABOR RELATIONS BOARD UNFAIR LABOR PRACTICE HEARING

to the Complaint on June 30, 2025. The Debtor’s petition for Chapter 11 relief was filed on July

29, 2025. [ECF No. 1].

The Debtor claims that it initiated settlement negotiations on August 4, 2025, and provided

the Union’s counsel with requested financial information. The Debtor sought an adjournment of

the Hearing on August 12, 2025, which was denied on August 14, 2025 by the NLRB. No request

has been made to the ALJ for an adjournment of the Hearing. On August 26, 2025, the Debtor and

the Union’s counsel met for a Zoom conference in which consent for an adjournment was once

again refused. Mr. Colitsas, who participated in the Zoom conference, was hospitalized on August

27, 2025. [ECF No. 45]. The Debtor’s application to retain replacement counsel for the NLRB

dispute was only recently granted on September 3, 2025. [ECF No. 52]. At the September 9, 2025

hearing before this Court, the Debtor expressed interest in further negotiations to stem the rising

costs of litigation.

Analysis

Under § 362(b)(4), governmental enforcement actions brought pursuant to a police power

may be exempt from the automatic stay to the extent that they promote health and safety or public

policy. 11 U.S.C. § 362(b)(4). This section exempts “the commencement or continuation of an

action or proceeding by a governmental unit . . . to enforce such governmental unit’s or

organization’s police and regulatory power, including the enforcement of a judgment other than a

money judgment, obtained in an action or proceeding by the governmental unit to enforce such

governmental unit’s or organization’s police or regulatory power” from the automatic stay. 11

U.S.C. § 362(b)(4).

Case No.: 25-17941

Caption: DECISION AND ORDER RE: DEBTOR’S EMERGENCY MOTION TO STAY

NATIONAL LABOR RELATIONS BOARD UNFAIR LABOR PRACTICE HEARING

The Third Circuit has permitted NLRB enforcement actions that impact health and safety

notwithstanding a debtor’s bankruptcy filing. Brock v. Morysville Body Works, Inc., 829 F.2d 383,

388-89 (3d Cir. 1987) (petition by Secretary of Labor to enforce Occupational Safety and Health

Administration citation for violations of safety and health standards was not stayed). Other circuits

have found that the NLRB is a governmental unit and that NLRB enforcement actions relating to

unfair labor practices may be exempt from the automatic stay. NLRB v. 15th Ave. Iron Works, Inc.,

964 F.2d 1336, 1337 (2d Cir. 1992) (adopting the majority view of the first, fifth, sixth, seventh,

and ninth circuit that the NLRB is a “governmental unit,” and unfair labor practice hearings and

enforcement actions are not stayed under § 362(b)(4)).

Two overlapping tests determine whether an enforcement action is exempted under §

362(b)(4) as an exercise of a police power: the public policy test and the pecuniary purpose test.

In re Nortel Networks, Inc., 669 F.3d 128, 139-41 (3d Cir. 2011) (action related to liability in a

pension shortfall focused on private rights rather than public protection). Under the tests,

enforcement actions aimed at public protection, and not primarily private rights of action or

monetary concerns, may proceed. Brock, 829 F.2d at 388-89 (finding the order intended to remedy

an unsafe worksite exempt from the stay, but the enforcement of a money judgment subject to the

stay); Chao v. Hosp. Staffing Servs., Inc., 270 F.3d 374, 389-94 (6th Cir. 2001) (a § 216 FLSA

action brought by the Department of Labor failed the public policy test because it primarily

enforces the employee’s private rights).

The NLRB asserts that the Hearing is only seeking to determine liability for unfair labor

practices and to restore the Union as the bargaining representative for the Debtor’s employees.

Case No.: 25-17941

Caption: DECISION AND ORDER RE: DEBTOR’S EMERGENCY MOTION TO STAY

NATIONAL LABOR RELATIONS BOARD UNFAIR LABOR PRACTICE HEARING

Collection of money damages would occur through a separate and later proceeding. [ECF No. 64].

This assertion is supported by the NLRB Complaint. [ECF No. 56, Ex. E]. The Court agrees to the

extent that the Hearing is necessary to establish that the Debtor engaged in unfair labor practices,

it would fall within the § 362(b)(4) exemption.

However, enforcement actions that fall within the § 362(b)(4) exception remain subject to

the Court’s powers under 11 U.S.C. § 105(a). See NLRB v. Edward Cooper Painting, Inc., 804

F.2d 934, 939-40, n.3 (6th Cir. 1986) (citing 2 Collier on Bankruptcy ¶ 362.05 at 362-40 (15th ed.

1985)); In re Bel Air Chateau Hosp., Inc., 611 F.2d 1248, 1251 (9th Cir. 1979). The Court has

discretion to issue a stay if it determines that the governmental proceedings “threaten” the

bankruptcy estate based on a case-by-case analysis. Matter of Nicholas, Inc., 55 B.R. 212, 217

(Bankr. D.N.J. 1985) (citations omitted). The Bankruptcy Court may enjoin the prosecution of an

enforcement action if the Debtor is entitled to equitable relief to protect its estate and/or in

furtherance of the bankruptcy process. See Penn Terra Ltd. v. Dep’t of Env’t Res., 733 F.2d 267,

273-74 (3d Cir. 1984).

Here, the Court finds that the Hearing is within the § 362(b)(4) exemption to the automatic

stay. But, the Court will exercise its § 105(a) powers and enjoin the Hearing. The Debtor seeks a

“breathing spell” of a mere 30 days to allow time for its accountant to recover from his illness, for

its counsel to prepare for the Hearing, and to further settlement talks. Considering the brief time

requested, the gravity of the CBA issue to this bankruptcy case, the ongoing settlement efforts,

and the high costs of litigation, moving forward with the Hearing on September 16, 2025 would

burden the estate and hinder the bankruptcy process.

Case No.: 25-17941

Caption: DECISION AND ORDER RE: DEBTOR’S EMERGENCY MOTION TO STAY

NATIONAL LABOR RELATIONS BOARD UNFAIR LABOR PRACTICE HEARING

Additionally, in the September 9, 2025 hearing, the Debtor stated its intent to later utilize

11 U.S.C. § 1113. This section of the Bankruptcy Code provides specific circumstances where a

debtor may assume, reject, or modify a collective bargaining agreement. 11 U.S.C. § 1113(a). The

Third Circuit has held that § 1113 applies to a collective bargaining agreement even after it has

expired. In re Trump Ent. Resorts, 810 F.3d 161, 173 (3d Cir. 2016). Based on the limited record

here, it is possible that the ALJ might conclude that although the CBA expired in November 2023,

the Debtor was required to maintain the status quo until a new agreement could be reached. In re

Trump Ent. Resorts, 810 F.3d at 168. If the Debtor chooses to pursue the § 1113 procedure to reject

or modify the CBA after the Hearing, the § 1113 matter will be heard by this Court.

The treatment of the CBA and the Union’s claims in this case seem to be very significant

to the Debtor’s financial reorganization. The Debtor should have ample time to negotiate a

settlement with the Union or, if necessary, develop a litigation strategy. This matter is nothing

more than a contested adjournment request. The Debtor is not seeking to tread upon the NLRB’s

enforcement rights. The Debtor has been in Chapter 11 for just over one month. Its request for a

30-day adjournment is not unreasonable. The parties are urged to meet and confer over factual and

legal issues to streamline proceedings before the ALJ and this Court. Generally, the interests of

debtors in bankruptcy and their creditors are not served by protracted and expensive legal

proceedings.

THEREFORE, IT IS ORDERED THAT the Court grants Debtor’s emergency motion

to stay the NLRB Hearing scheduled on September 16, 2025 for 30 days until October 16, 2025,

or the next date thereafter that the ALJ can conduct the hearing.