In Re Revel AC, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 15-1253

In re: REVEL AC, INC., ET AL.,

Debtors

IDEA BOARDWALK, LLC,

Appellant

Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil Action No. 1-15-cv-00299)

District Judge: Honorable Jerome B. Simandle

Argued February 6, 2015

Before: AMBRO, SHWARTZ, and KRAUSE, Circuit Judges

(Opinion filed: September 30, 2015)

Jeffrey A. Cooper, Esquire (Argued)

Jonathan I. Rabinowitz, Esquire

Barry J. Roy, Esquire

Rabinowitz, Lubetkin & Tully

293 Eisenhower Parkway, Suite 100

Livingston, NJ 07039

Counsel for Appellant

IDEA Boardwalk LLC

Michael Viscount, Jr., Esquire

John H. Strock, Esquire

Fox Rothschild

1301 Atlantic Avenue

Midtown Building, Suite 400

Atlantic City, NJ 08401

Jason N. Zakia, Esquire (Argued)

John K. Cunningham, Esquire

White & Case

200 South Biscayne Boulevard, Suite 4900

Miami, FL 33131

Counsel for Appellees/Debtors

Revel AC, LLC; Revel Atlantic City LLC;

Revel Entertainment Group LLC;

NB Acquisition LLC; SI LLC

Stuart J. Moskovitz, Esquire

819 Highway 33

Freehold, NJ 07728

Counsel for Appellee

Polo North Country Club Inc.

2

Richard W. Riley, Esquire

Duane Morris

222 Delaware Avenue, Suite 1600

Wilmington, DE 19801

Sommer L. Ross, Esquire

Duane Morris

30 South 17th Street, United Plaza

Philadelphia, PA 19103

Counsel for Appellees

Wells Fargo Bank NA;

Wells Fargo Principal Lending LLC

OPINION OF THE COURT

AMBRO, Circuit Judge

We seldom focus on how to balance the four factors

that determine whether to grant a stay pending appeal despite

the practical and legal importance of these procedural

standstills. So we take this opportunity to do just that. 1

I. BACKGROUND

1

Because of the time-sensitive nature of this appeal, we were

unable to give a full rationale for our ruling on the date we

entered judgment in favor of Appellant IDEA Boardwalk,

LLC, reversing the District Court’s denial of its stay request.

This opinion does so.

3

In April 2012 Appellee Revel AC, Inc., et al.

(“Revel”) opened a 47-story, 710-foot-high resort-casino

(which we refer to simply as the “Casino”) in Atlantic City,

New Jersey. The Casino was marketed as “a state of the art

gaming and resort facility unlike any other in Atlantic City.”

Its cost: $2.4 billion, making it the most expensive hotel ever

built in Atlantic City. See Tom Corrigan, Atlantic City’s

Revel Casino Files for Bankruptcy Again, Wall Street J. (June

19, 2014, available at http://www.wsj.com/articles/atlantic-

citys-revel-casino-files-for-bankruptcy-again-1403212625).

As part of its plan for the Casino, Revel entered into a lease

with Appellant IDEA Boardwalk, LLC (“IDEA”) to run two

upscale nightclubs and a beach club. The lease was for a 10-

year term (with a 15-year option to extend) and obligated

IDEA to contribute $16 million of the $80 million projected

cost of construction of the clubs (in addition to its monthly

rental payments as lessee).

Unfortunately the Casino’s $2.4 billion price tag was

no indication of its future success. A sluggish Atlantic City

economy and the Casino’s inability to turn a profit were too

much for Revel to overcome. After a failed sale attempt,

Revel’s cash flow problems made a (second) trip to

bankruptcy the only option. 2 It filed a so-called

“Chapter 22” on June 19, 2014. As part of its first-day

3

2

Revel had previously filed under Chapter 11 of the

Bankruptcy Code in March 2013 and confirmed a plan of

reorganization in May of that same year.

3

A number of Revel’s subsidiaries also filed for bankruptcy.

They include Revel AC, LLC, Revel Atlantic City, LLC,

Revel Entertainment Group, LLC, NB Acquisition, LLC, and

SI LLC. For convenience, we refer to Revel and its

subsidiaries jointly and severally as “Revel.”

4

filings, Revel asked the Bankruptcy Court for permission to

sell its assets free and clear of all liens and interests (which

includes leases) and to approve bid procedures to allow that

sale as quickly as possible. The Court approved the request

and set August 7, 2014 as the auction date.

A. Revel’s Attempt to Sell the Casino in

Bankruptcy

The request to sell the Casino “free and clear” raised

the ire of its tenants—among them, IDEA. 4 Its concern was

that, were the sale as proposed to occur, the value of its lease

would turn to zero notwithstanding its initial $16 million

investment. To protect that investment, IDEA filed

objections to the proposed sale. It made clear that its intent

was not to scuttle the sale, but to block Revel from selling the

Casino stripped of its lease. Citing 11 U.S.C. § 365(h), IDEA

argued that, notwithstanding a rejection of that lease, it can

retain its possessory interest, as the subsection provides that a

lessee may retain its rights under such lease

. . . for the balance of the term of such lease

and for any renewal or extension of such

rights to the extent that such rights are

enforceable under applicable nonbankruptcy

law.

11 U.S.C. § 365(h)(1)(A)(ii). Alternatively, IDEA contended

that even if § 365(h) did not secure its interest, § 363(f)—the

4

The other tenants include: (1) the so-called “Amenity

Tenants” (made up of a group of companies that operated an

array of food, liquor, and retail establishments within the

Casino); and (2) ACR Energy Partners (the provider of water

and power to the Casino).

5

Code provision that allows for the sale of an asset free and

clear5—was of no use to Revel, as it couldn’t satisfy any of

the five alternative conditions necessary to trigger a sale

under its strictures.

Notwithstanding the objection of IDEA, Revel

continued the auction process and embarked on a lengthy

marketing campaign, communicating with over 200 potential

investors. Unfortunately the market for Revel’s assets proved

thin, and, because not a single qualified buyer came to the

table, the Bankruptcy Court postponed the August 7 auction.

About a month later, on September 2, Revel closed the

Casino’s doors and barred its tenants, IDEA included, from

accessing the Casino premises. When that happened, IDEA

gave written notice that (1) it intended to continue operating

its beach club and one of its nightclubs notwithstanding the

Casino’s closure and (2) it expected Revel to continue to

abide by the terms of its lease. More specifically, IDEA

asked that Revel “continue to honor its obligation under the

Lease to provide uninterrupted utility service.” Am. Compl. ¶

96, IDEA Boardwalk, LLC v. Revel Entm’t Grp., LLC, No.

14-01756 (Bankr. D.N.J. Sept. 26, 2014), ECF No. 6. To put

its plan into action, IDEA met with representatives from

5

Subsection 363(f) provides that a debtor can sell its assets

free and clear of “any interest” (here a lease) if (1) applicable

nonbankruptcy law so permits, (2) the interest holder

consents, (3) the interest is a lien and the price at which the

debtor’s assets are being sold is greater than the value of all

the liens on its property, (4) the validity of the interest is in

bona fide dispute, or (5) the interest holder, whether in a legal

or equitable proceeding, could be compelled to accept a

money judgment for its interest. 11 U.S.C. § 363(f)(1)–(5).

6

various city agencies to secure approval to operate on a stand-

alone basis and sued Revel to enjoin it from “failing to

provide utilities and parking” and engaging in any other

conduct “that prevents IDEA from operating the HQ Dayclub

and HQ Nightclub in accordance with the terms of the

Lease.” Id. ¶ 118. Furthermore, and to assert its rights under

§ 365(h), IDEA sought a declaratory judgment that, “under

applicable law[,] the Lease is a lease of non-residential real

property as that term is defined and governed by 11 U.S.C. §

365 and, as such, is entitled to all relevant statutory

protections, including, but not limited to[,] 11 U.S.C. §

365(h).” Id. ¶ 144(a).6

B. Polo North Becomes “Stalking Horse”

Bidder

Revel’s continued marketing efforts paid off when it

came to terms on September 5, 2014 with Polo North Country

Club, an entity controlled by a Florida-based real estate

developer. Under the proposed Asset Purchase Agreement,

Polo North agreed to buy the Casino for $90 million and to

serve as the “stalking horse” bidder at the upcoming auction.

If Polo North lost at auction, it would receive $3 million as a

break-up fee. If, however, Polo North walked away from the

deal, it would surrender its $10 million deposit. The

Bankruptcy Court approved Revel’s request to modify the

6

In connection with Revel’s first bankruptcy case, IDEA

likewise sought, among other things, essentially the same

declaration. Am. Compl. ¶ 89(a), IDEA Boardwalk, LLC v.

Revel AC, Inc., No. 13-2013 (Bankr. D.N.J. May 30, 2014),

ECF No. 7. In its answer, Revel “[d]enied” IDEA’s

allegation that it held a non-residential lease. See Answer ¶¶

82–89, IDEA Boardwalk, LLC v. Revel AC, Inc., No. 13-2013

(Bankr. D.N.J. June 13, 2014), ECF No. 8.

7

auction bid procedures to allow for the payment of the break-

up fee and set a revised bid deadline for September 24, 2014.

At the postponed auction, which ultimately took place on

October 1, the highest bidder was not Polo North but

Brookfield U.S. Holdings, LLC, as its $110 million bid

topped the $94.5 million all-cash bid of Polo North. The

Bankruptcy Court approved the sale to Brookfield on

October 7.

Reentering the picture, IDEA argued that “it has the

right under Section 365(h) of the [] Code to elect to remain in

possession and[,] in that event, [Revel] [is] obligated to

provide possession and rights appurtenant thereto,” including

“various easements for utilities and other services.”

Objection of IDEA Boardwalk, LLC ¶¶ 74, 77, In re Revel

AC, Inc., No. 14-22654 (Bankr. D.N.J. Oct. 13, 2014), ECF

No. 754. IDEA also reaffirmed that, because it “has direct

access to the boardwalk and the streets,” it “can operate [its

clubs] without impinging . . . [Revel’s] possessory rights.”

Id. ¶ 78.

Before Revel could respond, Brookfield walked away

from the deal, thus surrendering its $11 million deposit and

bringing Polo North back into the fold as the back-up winning

bidder. The Bankruptcy Court thereafter granted Revel’s

motion to terminate the sale to Brookfield and scheduled a

hearing to approve the sale to Polo North.

C. Revel Responds to IDEA at the 11th Hour

Late on the Friday night just three days before the

January 5, 2015 sale hearing, Revel filed an “Omnibus

Reply” to IDEA’s objections. Regarding the latter’s § 365(h)

argument, Revel urged the Court to follow the Seventh

Circuit’s decision in Precision Indus., Inc. v. Qualitech Steel

SBQ, LLC, 327 F.3d 537 (7th Cir. 2003), which held that

8

§ 365(h) doesn’t disable § 363(f)’s authority to sell property

subject to a lease free and clear of that lease and instead

triggers only when a debtor seeks to reject a lease under §

365. Id. at 548. Revel also asserted that it could satisfy one of

§ 363(f)’s five conditions—namely, § 363(f)(4)—because a

bona fide dispute exists with respect to the validity of IDEA’s

lease. According to Revel, though the form of its agreement

with IDEA gives the appearance of a lease, because rent was

“based entirely on a percentage of the revenue derived from”

IDEA’s operations, it was not a “true lease[] entitled to

benefit from the applicable protections set forth in the

Bankruptcy Code.” Debtors’ Omnibus Reply ¶ 20, In re

Revel AC, Inc., No. 14-22654 (Bankr. D.N.J. Jan. 2, 2015),

ECF No. 1109.

D. The Sale Hearing

At the sale hearing, the Bankruptcy Court considered

the following legal issues: (1) whether sales of property under

§ 363(f) can wipe out a lessee’s possessory interest under

§ 365(h); and (2) whether Revel introduced enough evidence

to show that the validity of IDEA’s lease was the subject of a

bona fide dispute under § 363(f)(4), thus satisfying an

eligibility requirement to invoke subsection (f). 7 Only if the

7

The Bankruptcy Court did not address whether IDEA

would receive adequate protection under 11 U.S.C. § 363(e)

if the Casino were sold free and clear of its lease. Under that

provision, where a tenant expects to lose its lease and asks for

protection of its interest, “the court, with or without a hearing,

shall prohibit or condition such use, sale, or lease as is

necessary to provide adequate protection of such interest.”

9

Court found in favor of Revel on each of these two issues

could it sell the Casino free and clear of IDEA’s lease.

On the first issue, the Bankruptcy Court pointed to a

“split of authority”: some courts hold that § 363(f) doesn’t cut

off a tenant’s possessory rights under § 365(h), see, e.g., In re

Zota Petroleums, LLC, 482 B.R. 154, 163 (Bankr. E.D. Va.

2012), while others go another path to say that § 365(h) “says

nothing at all about sales of estate property, which are the

province of section 363,” Qualitech, 327 F.3d at 547, the

result in the latter case being that sales of property under §

363 can cut off the possessory interests of lessees under §

365. See Sale Hr’g Tr. 51:9-13, In re Revel AC, Inc., No. 14-

22654 (Bankr. D.N.J. Jan. 8, 2015), ECF No. 1175.

The second issue, the Bankruptcy Court conceded,

presented “the more difficult” legal question: whether Revel

had enough evidence to show that the validity of IDEA’s

lease was the subject of a bona fide dispute under § 363(f)(4).

Id. at 52:21–22. The trouble was that Revel didn’t provide

the purportedly disputed lease to the Bankruptcy Court or

much of anything to cloud its validity, though § 363(f) places

the burden squarely on Revel’s shoulders. See id. at 53:3–5

(“[Revel] didn’t give me any of the leases . . . or any, really,

evidence in support of its position of the bona[]fide dispute . .

. .”). But, because of the need to push the sale through, the

Court maintained that it “can’t look at the result totally as to

what the law requires,” id. at 53:8, though, if time weren’t of

the essence, it “probably would have put [the hearing] off to

have more evidence presented,” id. at 55:12–13. With not

much to go on, the Court concluded that, because IDEA (and

the other tenants) were akin to “partners of [Revel’s]

enterprise,” id. at 54:14–15, rather than mere tenants, Revel

met its burden that “there is a bona[]fide issue in dispute” as

to the leases, id. at 55:16–17. Hence the Court approved the

sale and allowed Revel to sell its assets “free and clear of

10

existing tenancies and/or possessory rights, irrespective of

any rights a tenant may hold under 11 U.S.C. § 365(h),

including, but not limited to, all possessory rights.” Sale

Order ¶ 14, In re Revel AC, Inc., No. 14-22654 (Bankr. D.N.J.

Jan. 8, 2015), ECF No. 1138.

IDEA appealed that order and moved to stay the

Court’s decision pending appeal, noting the risk that, if the

decision were not stayed, its appeal would be moot under

11 U.S.C. § 363(m) once the sale closed. That provision

provides, in relevant part, that

[t]he reversal or modification on appeal of an

authorization . . . of a sale or lease of property

does not affect the validity of a sale or lease

under such authorization to an entity that

purchased or leased such property in good faith,

whether or not such entity knew of the

pendency of the appeal, unless such

authorization and such sale or lease were stayed

pending appeal.

11 U.S.C. § 363(m). In a one-paragraph order, the

Bankruptcy Court denied IDEA’s request. With its options

dwindling and time winding down, IDEA filed an emergency

motion before the District Court to stay the Bankruptcy

Court’s sale order.

E. The District Court Denies IDEA’s Stay

Request

In considering whether to grant a stay pending appeal,

courts consider the following four factors: (1) whether the

appellant has made a strong showing of the likelihood of

success on the merits; (2) will the appellant suffer irreparable

injury absent a stay; (3) would a stay substantially harm other

11

parties with an interest in the litigation; and (4) whether a stay

is in the public interest. See, e.g., Republic of Phil. v.

Westinghouse Electric Corp., 949 F.2d 653, 658 (3d Cir.

1991). Because IDEA is the only party before us, we limit

our examination of the District Court’s ruling to its treatment

of IDEA’s objections.

1. Likelihood of Success

On the first prong, the District Court maintained that

IDEA needed to show that it had a “substantial” or “strong”

case on appeal. In re Revel AC, Inc., 525 B.R. 12, 24 (D.N.J.

2015) (internal quotation marks omitted). Addressing

§ 365(h) first, the Court noted that, because the legal issue

was the subject of an “undisputed split of authority,” IDEA at

most showed a possibility and not a likelihood (which we

understood the Court to mean more likely than not) of

success. Id. (internal quotation marks omitted).

It next addressed whether the Bankruptcy Court

clearly erred in finding that Revel put forth enough evidence

to show that a bona fide dispute existed as to the validity of

IDEA’s lease. See id. at 26. Despite the Bankruptcy Court’s

failure to mention it, the District Court emphasized that

“IDEA specifically sought a declaratory judgment concerning

the nature of [its] agreement with [Revel],” id. at 29, even

though, as IDEA asserted, its lawsuit “principally concerned

[its] request for an energy easement, rather than an effort . . .

to challenge the characterization of its Agreement,” id. at 29

n.14. In the District Court’s view, the pending litigation

“arguably provide[d] some objective basis . . . to find . . .

some bona fide issue in dispute,” id. at 29 (emphases added),

because, “in answering [the] complaint, [Revel] specifically

denied that [the] Agreement constituted a lease,” id. at 29

n.14. Consequently, the District Court concluded that IDEA

12

did not “demonstrate[] a likelihood of success on the merits”

of the § 363(f)(4) issue either. Id. at 30.8

2. Irreparable Harm

On the irreparable-harm prong, the District Court

considered whether IDEA had “demonstrated the potential for

an actual and imminent, rather than remote or speculative,

irreparable harm.” Id. at 31. IDEA posited that, absent a stay,

if Revel and Polo North closed on the sale, this would render

its claim statutorily moot under § 363(m), leading to the loss

of its lease and the end of its business at the Casino. In the

8

The District Court came to the same conclusion regarding

whether Revel satisfied § 363(e)’s adequate protection

requirement. IDEA had argued that adequate protection

means continued possession of its lease, not merely money

damages, as the Code provides that “adequate protection may

be provided by . . . granting such other relief . . . as will result

in the realization by such entity of the indubitable equivalent

of such entity’s interest in such property.” 11 U.S.C. §

361(3). But the Court thought otherwise, declaring that

rejection damages were an adequate substitute for continued

possession. See In re Revel, 525 B.R. at 31 (noting that “it is

more than arguable that granting possession to [IDEA] in the

present circumstances of a catastrophically failed casino-hotel

concept would be no more ‘adequate’ than what [it] received,

namely, the right to assert [a] claim[] for rejection damages or

other relief as [an] unsecured creditor[]”). It also minimized

the Bankruptcy Court’s failure to make any findings on

whether IDEA’s interest would be adequately protected. In

the District Court’s view, because the Bankruptcy Court

found that § 363(f) was satisfied, it “necessarily found the

interests of [the various tenants] adequately protected.” Id.

13

District Court’s view, a mooted claim doesn’t qualify as an

irreparable injury nor does the potential loss of IDEA’s

possessory rights. See id. Regarding the latter, the Court

noted that IDEA effectively had been dispossessed since

September 2014 and would gain nothing by retaking

possession of a space “in an empty and commercially-

unproductive building.” Id. at 32; see also id. at 31

(“[T]hough the [tenants] assert that the loss of their

possessory rights would result in irreparable injury, [they]

ignore that they have been without valuable possessory rights

since September 2014.”). Hence, as with the first prong, the

Court held it did not weigh in IDEA’s favor.

3. Harm to Others

For the third factor in the stay analysis, IDEA

contended that, because it doesn’t seek a stay of the sale itself

but only the provision of the Sale Order that terminates its

lease, Revel wouldn’t be injured. The District Court,

focusing only on the debtor (presumably because it was the

only party opposing IDEA’s stay motion), thought otherwise.

In its view, because of the “easily terminable $10 million

option [of Polo North] to purchase [Revel’s] assets,” there

was a good chance it “would elect not to proceed with

closing” if the Court granted the stay. Id. at 32 (internal

quotation marks omitted). And “the palpable risk of losing a

ready buyer,” the Court maintained, “demonstrates . . . a risk

of substantial harm to [Revel].” Id. (emphasis omitted); see

also id. at 33 (describing Revel’s exhaustive search for a

buyer that yielded only two qualified buyers). Thus it found

that the third factor weighed against a stay.

4. Public Interest

Finally, IDEA asserted that the public interest favors a

stay because the public has a strong interest in the correct

14

application of bankruptcy law and the continuing operation of

hospitality providers at Revel. Again the District Court

disagreed. In its view, even assuming that IDEA expressed

valid public policy concerns, “such concerns would not

sufficiently outweigh the far more prevalent interest in

facilitating the success of bankruptcy proceedings,” id., along

with the “permanent loss of approximately 4,000 jobs” and

“substantial detriment to the City of Atlantic City and []

surrounding areas” a failed sale could trigger, id. at 34

(internal quotation marks omitted). As with the first three

factors, the public interest “favors the facilitation of the asset

sale, and, accordingly, weighs against the imposition of a

stay.” Id.

IDEA appeals.

II. JURISDICTION

Revel argues that we don’t have jurisdiction to

entertain IDEA’s appeal from the District Court’s stay denial

under either 28 U.S.C. § 158(d)(1) or 28 U.S.C. § 1292(a)(1).

We disagree. Subsection 158(d)(1) provides that “[t]he courts

of appeals shall have jurisdiction of appeals from all final

decisions, judgments, orders, and decrees” entered under

subsections 158(a) and (b). Though a stay denial is not

technically a final judgment, it is here in a practical sense

because, under 11 U.S.C. § 363(m), the upshot of declining

IDEA’s stay request is to prevent it from obtaining a full

airing of its issues on appeal and a decision on the merits, as

that provision protects purchasers from any modification on

appeal of an order authorizing a sale. Consequently, the

District Court’s decision denying IDEA’s stay request was

final for purposes of § 158(d)(1). See In re Trans World

Airlines, Inc., 18 F.3d 208, 215 (3d Cir. 1994)

(acknowledging that “finality must be viewed more

pragmatically in bankruptcy appeals under § 158(d) than in

15

other contexts”); see also James M. Grippando, Circuit Court

Review of Orders on Stays Pending Bankruptcy Appeals to

U.S. District Courts or Appellate Panels, 62 Am. Bankr. L.J.

353, 360 (1988) (arguing that “‘finality’ for purposes of

section 158 is a fluid concept to be determined [on] a case by

case basis”).

Our decision in Trans World Airlines is not to the

contrary. The question there was whether the District Court’s

grant of a stay was final for purposes of § 158(d). We held

that it was not, “[e]ven under the most relaxed concept of

finality,” because the stay grant didn’t “fully adjudicate a

specific adversary proceeding between the parties.” In re

Trans World Airlines, 18 F.3d at 216. The difference here is

that the District Court denied a stay, and the practical effect

was to resolve IDEA’s appeal on the merits, as the

combination of the imminent closing of the sale and § 363(m)

would have mooted its appeal.

Thus, where it is all but assured that a statute will

render an appeal moot absent a stay, a stay denial is

appealable under § 158(d)(1). We express no opinion on

whether we have also have jurisdiction under 28 U.S.C. §

1292(a)(1)—see generally In re Forty-Eight Insulations, Inc.,

115 F.3d 1294, 1300 (7th Cir. 1997) (exercising jurisdiction

over a stay denial under 28 U.S.C. § 1292(a)(1) because the

District Court’s order had “both the effect of an injunction

and [] serious, perhaps irreparable, consequences” (quoting

Cent. States v. Cent. Cartage Co., 84 F.3d 988, 991 (7th Cir.

1996) (internal quotation marks omitted))—and leave for

another day whether we have jurisdiction to review a stay

denial where the underlying appeal could become equitably

moot.

III. STANDARD OF REVIEW

16

At this juncture, only the District Court’s denial of

IDEA’s stay request is at issue. We generally review appeals

from a denial of a stay for abuse of discretion, see Bradley v.

Pittsburgh Bd. of Educ., 910 F.2d 1172, 1175 (3d Cir. 1990),

giving “proper regard to . . . [the District Court’s] ‘feel’ of the

case,” Omega Importing Corp. v. Petri-Kine Camera Co., 451

F.2d 1190, 1197 (2d Cir. 1971) (Friendly, J.) (citation

omitted). However, we review de novo the District Court’s

decision on the likelihood of success, for it involves a purely

legal determination. See In re Forty-Eight Insulations, 115

F.3d at 1301.

IV. ANALYSIS

Despite the growing importance of stays pending

appeal, we have provided little direction on how to balance

the four stay factors, mostly “[b]ecause this [C]ourt ordinarily

grants or denies a stay pending appeal without opinion.”

Westinghouse Electric Corp., 949 F.2d at 658. Despite its

comprehensiveness, Westinghouse unfortunately shed little

light on how to balance the four stay factors when not all of

them point in the same direction. (The factors there all

favored a stay denial.) We take this opportunity to provide

guidance on how to conduct a balancing of the stay factors.

A. The Sliding-Scale Approach to Balancing the

Stay Factors

Under Federal Rule of Bankruptcy Procedure 8007, a

party can move to stay the effect of a bankruptcy court order

pending a resolution on appeal. See Fed. R. Bankr. P. 8007.

The factors considered “overlap” the familiar ones courts

look to in ruling on applications for preliminary injunctions.

See Nken v. Holder, 556 U.S. 418, 434 (2009) (observing that

“similar concerns arise whenever a court order may allow or

disallow anticipated action before the legality of that action

17

has been conclusively determined”). To repeat essentially

what was already noted above, the following factors come

into play:

(1) whether the stay applicant has made a

strong showing that [it] is likely to succeed on

the merits; (2) whether the applicant will be

irreparably injured absent a stay; (3) whether

issuance of the stay will substantially injure

the other parties interested in the proceeding;

and (4) where the public interest lies.

Hilton v. Braunskill, 481 U.S. 770, 776 (1987). In order not

to ignore the many gray shadings stay requests present, courts

“balance[e] them all” and “consider the relative strength of

the four factors.” Brady v. Nat’l Football League, 640 F.3d

785, 789 (8th Cir. 2011) (quoting Fargo Women’s Health

Org. v. Schafer, 18 F.3d 526, 538 (8th Cir. 1994) (internal

quotation marks omitted)); see also 16A Charles Alan Wright

et al., Federal Practice and Procedure § 3954 (4th ed. 2008)

(“The four factors should be balanced; thus, for example, if

the balance of harms tips heavily enough in the stay

applicant’s favor then the showing of likelihood of success

need not be as strong, and vice versa.” (footnotes omitted)).

“[T]he most critical” factors, according to the Supreme

Court, Nken, 556 U.S. at 434, are the first two: whether the

stay movant has demonstrated (1) a strong showing of the

likelihood of success and (2) that it will suffer irreparable

harm—the latter referring to “harm that cannot be prevented

or fully rectified” by a successful appeal, Roland Mach. Co.

v. Dresser Indus., 749 F.2d 380, 386 (7th Cir. 1984) (Posner,

J.). Though both are necessary, the former is arguably the

more important piece of the stay analysis. As Judge Posner

has remarked, it isn’t enough that the failure to obtain a stay

will be “a disaster” for the stay movant but only a “minor

18

inconvenience to the defendant,” as “[e]quity jurisdiction

exists only to remedy legal wrongs; [thus,] without some

showing of a probable right[,] there is no basis for invoking

it.” Id. at 387.

Just how strong of a merits case must a stay applicant

show? The “formulations used to describe the degree of

likelihood of success that must be shown” vary widely.

Mohammed v. Reno, 309 F.3d 95, 100 (2d Cir. 2002)

(emphasis in original). To give but a sampling of the range

that exists, some require a showing that the underlying appeal

is “more likely to succeed than fail.” Abdul Wali v. Coughlin,

754 F.2d 1015, 1026 (2d Cir. 1985) overruled on other

grounds by O’Lone v. Estate of Shabazz, 482 U.S. 342

(1987). Others call for a “substantial possibility, although

less than a likelihood, of success.” Dubose v. Pierce, 761

F.2d 913, 920 (2d Cir. 1985)9 (quoting Hayes v. City Univ. of

N.Y., 503 F. Supp. 946, 963 (S.D.N.Y 1980)) vacated on

other grounds 108 S.Ct. 2890 (1988); see also generally John

Y. Gotanda, The Emerging Standards for Issuing Appellate

Stays, 45 Baylor L. Rev. 809, 813–15 (1993). For our Court,

a sufficient degree of success for a strong showing exists if

there is “a reasonable chance, or probability, of winning.”

Singer Mgmt. Consultants, Inc. v. Milgram, 650 F.3d 223,

229 (3d Cir. 2011) (en banc). Thus, while it “is not enough

that the chance of success on the merits be ‘better than

negligible,’” Nken, 556 U.S. at 434 (citation omitted), the

likelihood of winning on appeal need not be “more likely than

not,” Singer Mgmt. Consultants, 650 F.3d at 229; see also

Wash. Metro. Area Transit Comm’n v. Holiday Tours, Inc.,

559 F.2d 841, 844 (D.C. Cir. 1977) (noting that the trouble

9

Yes, we realize this is the same Circuit Court in the same

year. Read on and realize that we are not immune from

internal tensions in our opinions.

19

with a “strict ‘probability’ requirement is [] it leads to an

exaggeratedly refined analysis of the merits at an early stage

in the litigation”).

On the second factor, the applicant must “demonstrate

that irreparable injury is likely [not merely possible] in the

absence of [a] [stay].” Winter v. Natural Res. Def. Council,

Inc., 555 U.S. 7, 22 (2008) (emphasis in text). While a

reference to “likelihood” of success on the merits has been

interpreted by courts to cover the generic range of outcomes,

for irreparable harm we understand the Supreme Court’s use

of “likely” to mean more apt to occur than not. See generally

Michigan v. U.S. Army Core of Engineers, 667 F.3d 765, 788

(7th Cir. 2011) (holding that for harm to be likely “there must

be more than a mere possibility that harm will come to pass

… but the alleged harm need not be occurring or be certain

before a court may grant relief”) (citation omitted).

“Once an applicant satisfies the first two factors, the

traditional stay inquiry calls for assessing the harm to the

opposing party and weighing the public interest.” Nken, 556

U.S. at 435. We weigh the likely harm to the movant (absent

a stay) (factor two) against the likely irreparable harm to the

stay opponent(s) if the stay is granted (factor three). This is

called the balancing of harms or balancing of equities. We

also take into account where the public interest lies (factor

four)—in effect, how a stay decision has “consequences

beyond the immediate parties.” Roland Mach., 749 F.2d at

388.

In this context, a number of outcomes are possible.

Where the balance of harms and public interest weigh in

favor of a stay and the court deems that the stay movant has

made a sufficient showing of success on appeal, a stay should

be granted. Where the opposite is true—i.e., the merits,

balance of harms, and public interest favor the stay

20

opponent—a stay should be denied. Between these easy

examples are the more difficult cases, such as “where the

merits favor one party and the balance of harms favors the

other.” Gotanda, supra, at 821. There (along with the public

interest) we must “evaluate the degree of irreparable injury

with the prospects of prevailing on the merits.” Id.

In deciding how strong a case a stay movant must

show, we have viewed favorably what is often referred to as

the “sliding-scale” approach. See Constructors Ass’n of W.

Pa. v. Kreps, 573 F.2d 811, 815 (3d Cir. 1978); Del. River

Port Auth. v. Transamerican Trailer Transp., Inc., 501 F.2d

917 (3d Cir. 1974). Under it, “[t]he necessary ‘level’ or

‘degree’ of possibility of success will vary according to the

court’s assessment of the other [stay] factors.’” Mohammed,

309 F.3d at 101 (second alteration in original) (quoting Wash.

Metro., 559 F.2d at 843). Stated another way, “[t]he more

likely the plaintiff is to win, the less heavily need the balance

of harms weigh in [its] favor; the less likely [it] is to win, the

more need it weigh in [its] favor.” Roland Mach., 749 F.2d at

387. As we described in Kreps (in considering all four

factors though in the context of deciding whether to grant a

preliminary injunction),

in a situation where factors of irreparable harm,

interests of third parties and public

considerations strongly favor the moving party,

an injunction might be appropriate even though

plaintiffs did not demonstrate as strong a

likelihood of ultimate success as would

generally be required. In contrast, where the

threatened irreparable injury is limited or is

balanced to a substantial degree by

countervailing injuries which would result to

third parties, or to the public interest from the

issuance of an injunction, greater significance

21

must be placed upon the likelihood that the

party will ultimately succeed on the merits of

the litigation.

573 F.2d at 815 (footnotes omitted) (internal quotation marks

omitted); see In re A & F Enters., Inc. II, 742 F.3d 763, 766

(7th Cir. 2014) (“As with a motion for a preliminary

injunction, a ‘sliding scale’ approach applies; the greater the

moving party’s likelihood of success on the merits, the less

heavily the balance of harms must weigh in its favor, and vice

versa.”); Mohammed, 309 F.3d at 101 (“The probability of

success that must be demonstrated is inversely proportional to

the amount of irreparable injury plaintiff[] will suffer absent

the stay. Simply stated, more of one excuses less of the

other.” (alteration in original) (quoting Mich. Coal. of

Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d

150, 153 (6th Cir. 1991).

Keeping in mind that the first two factors are the most

critical, if “the chance of success on the merits [is only] better

than negligible” and the “possibility of irreparable injury” is

low, a stay movant’s request fails. Nken, 556 U.S. at 434

(internal quotation marks omitted). Likewise, “even if a

movant demonstrates irreparable harm that decidedly

outweighs any potential harm to the [stay opponent] if a stay

is granted, [it] is still required to show, at a minimum,

‘serious questions going to the merits.’” Mich. Coal. of

Radioactive Material Users, 945 F.2d at 153–54 (quoting In

re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir.

1985)).

Our dissenting colleague criticizes the “sliding-scale”

approach as “fail[ing] to honor” Third Circuit precedent.

Dissenting Op. 1. In her view, there is no balancing—a

court’s consideration of a stay request is an all-or-nothing

proposition. To merit a stay, she believes, the stay applicant

22

must “demonstrate,” id., that it will “satisfy,” id. at 3, each of

the four stay factors. If it doesn’t, then, even if the stay

applicant’s chances of success on appeal are assured (let

alone more probable than not) and the applicant will likely

suffer an irreparable injury, a stay must be denied if, for

example, it isn’t in the public interest. That approach is not

only impractical, it has the potential to be deeply unfair, and

is one we have explicitly disavowed. In Delaware River Port

Authority v. Transamerican Trailer Transport, for example,

we couldn’t have been clearer in establishing that

“consideration of [the four] factors by the district court

requires a ‘delicate balancing.’” 501 F.2d at 920. We

reaffirmed that concept in Kreps in observing that “no one

aspect” of the stay analysis “will necessarily determine its

outcome,” 573 F.2d at 815, assuming, we pause to note, that

the party seeking a stay has made a sufficient showing on the

first two factors. Therefore, where the balance of harms and

public interest “strongly favor[]” a stay, a court may enter it

even if the applicant didn’t “demonstrate as strong a

likelihood of ultimate success as would generally be

required.” Del. River Port Auth., 501 F.2d at 923. Relatedly,

“when considerable injury will result from either the grant or

denial of a preliminary injunction, these factors [i.e., the

balance of harms] to some extent cancel each other and

greater significance must be placed upon the likelihood that

each party will ultimately succeed on the merits of the

litigation.” Id. at 924. To the extent later statements in our

opinions suggest the opposite—that “a complete failure to

satisfy any one of [the stay] factors precludes a stay,”

Dissenting Op. 2—they are not binding. See United States v.

Rivera, 365 F.3d 213, 213 (3d Cir. 2004) (“This Circuit has

long held that if its cases conflict, the earlier is the controlling

authority and the latter is ineffective as precedents.”).

To sum up, all four stay factors are interconnected, and

thus the analysis should proceed as follows. Did the applicant

23

make a sufficient showing that (a) it can win on the merits

(significantly better than negligible but not greater than 50%)

and (b) will suffer irreparable harm absent a stay? If it has,

we “balance the relative harms considering all four factors

using a ‘sliding scale’ approach. However, if the movant

does not make the requisite showings on either of these [first]

two factors, the [] inquiry into the balance of harms [and the

public interest] is unnecessary, and the stay should be denied

without further analysis.” In re Forty-Eight Insulations, 115

F.3d at 1300–01 (internal citation omitted). But depending on

how strong a case the stay movant has on the merits, a stay is

permissible even if the balance of harms and public interest

weigh against holding a ruling in abeyance pending appeal.

B. Application

Because our assessment of how strong a case IDEA

has is closely linked to the outcome of the balancing test, we

begin with the test itself (though we write from the back-end

first): the stronger the balance of harms and public interest is

in IDEA’s favor, the less a showing of potential success on

appeal we demand (keeping in mind that the likelihood of

success must be at least “a substantial case on the merits,”

Hilton, 481 U.S. at 778); the lesser the harms, the showing of

success must be stronger.

1. Whom does the balance of harms and public

interest favor?

To establish irreparable harm, a stay movant “must

demonstrate an injury that is neither remote nor speculative,

but actual and imminent.” Tucker Anthony Realty Corp. v.

Schlesinger, 888 F.2d 969, 975 (2d Cir. 1989) (internal

quotation marks omitted). “The possibility that adequate

compensatory or other corrective relief will be available at a

later date, in the ordinary course of litigation, weighs heavily

24

against a claim of irreparable harm.” Sampson v. Murray,

415 U.S. 61, 90 (1974) (internal quotation marks omitted);

see also Gotanda, supra, at 814 (defining “irreparable injury”

as “the harm [] the movant will suffer during the pendency of

the litigation that cannot be prevented or fully rectified by the

tribunal’s final decision”).

IDEA asserts that, absent a stay, its appeal will be

batted out of court by § 363(m), rendering the continued

operation of its business at the Casino impossible. As to

potential money damages, IDEA continues, the most it will

receive is pennies on the dollar, which grossly undervalues its

lease (and the millions it invested in reliance of it). See IDEA

Br. 41 (arguing that “a money judgment will not compensate

[it] for [the] loss of its possessory rights under §[]365(h)

because [Revel] [is] insolvent and, as a result, [has] no ability

to provide payment on any claim [IDEA] may have”). For its

part, Revel responds that IDEA’s argument rests on a flawed

assumption: that continued possession is substantially more

valuable than the rejection damages it would receive.

According to Revel (and the District Court), because Polo

North would likely walk away from the sale if it were stayed,

IDEA would be left with nothing but a possessory interest in

a vacant building. See In re Revel, 525 B.R. at 32 (“[I]t is

entirely logical that the absence of any occupant in the []

[C]asino would leave [IDEA] with, in essence, a possessory

right in an empty and commercially-unproductive building.”).

We do not accept that assertion. First, there is nothing

in the record to refute IDEA’s contention that it can operate

independently of the Casino. Indeed, a principal purpose of

its lawsuit against Revel was to confirm IDEA’s right of

access to a power source so that it can begin running its

business again. See Oral Arg. Tr. 85:4–7 (noting that IDEA

needed a utility easement “to continue to operate and work

with the utility company”). We thus deem unsupportable the

25

suggestion of the District Court that, if Polo North walked

away, IDEA would be left with “a possessory right in an

empty and commercially-unproductive building.” In re

Revel, 525 B.R. at 32.

That still leaves us with the lingering question of

whether rejection damages would sufficiently compensate

IDEA for the loss of possession (and its business). On that

question, we have previously observed that, though “a purely

economic injury, compensable in money, cannot satisfy the

irreparable injury requirement … an exception exists where

the potential economic loss is so great as to threaten the

existence of the movant’s business.” Minard Run Oil Co. v.

U.S. Forest Serv., 670 F.3d 236, 255 (3d Cir. 2011) (citation

and internal quotation marks omitted). That exception applies

here. If we deny the stay, IDEA will lose not only its multi-

million dollar investment but also the opportunity to operate

what was, until the Casino closed, a profitable business. See

Oral Arg. Tr. 100:12–18. In this context, IDEA shows

sufficient irreparable injury to it absent a stay. Thus we turn

to the harm to Revel (the only party who opposed IDEA’s

request for a stay) 10 and the public interest (the latter, in

essence, balances the benefits and harms to the public if a

stay is imposed and if it is not).

In assessing this side of the balance, the District Court

credited Revel’s “position that the issuance of [a] stay would

present ‘a real and substantial risk that Polo North would

elect not to proceed with closing.’” In re Revel, 525 B.R. at

10

Polo North, though obviously having an interest in the

outcome, took no significant role in advocating for or against

a stay, and neither the Bankruptcy Court nor the District

Court suggested that denying a stay would harm it, let alone

cause irreparable harm.

26

32. As it does on appeal, Revel’s counsel had argued that

even a limited stay would trigger bad things: Polo North

walking away and Revel having to liquidate its assets under

Chapter 7, which “not only would cause the permanent loss of

approximately 4,000 jobs the [Casino] once provided, but

also could cause substantial detriment to the City of Atlantic

City and the surrounding areas, and possibly further hamper

reorganization efforts at other casino resorts located in the

city.” Revel Br. 50.

In our view, the adequacy of the proof provided plays

an important role “[i]n evaluating the harm that will occur

depending upon whether or not [a] stay is granted.” Mich.

Coal. of Radioactive Material Users, 945 F.2d at 154.

Absent some sort of declaration or other evidence in the

record that a stay would cause substantial harm, the harm to

Revel was at best speculative. Note the context: Revel’s

counsel told the District Court that granting IDEA a stay only

to prevent its lease from being extinguished would

nonetheless spoil the entire sale. 11 On the other hand, if

IDEA lost its lease—a result a stay denial virtually

guaranteed—its business at Revel’s site would be

permanently shuttered. As a result, at the time of our ruling

in February, the balance-of-harms tilted (at least moderately)

in favor of IDEA.

11

As it turns out, a limited stay didn’t set off the

consequences Revel and Polo North said it would.

Notwithstanding the limited stay we put into place on

February 6, 2015, Revel and Polo North closed two months

later on April 7. See Notice of Sale Closing, In re Revel AC,

Inc., No. 14-22654 (Bankr. D.N.J. Apr. 7, 2015), ECF No.

1553.

27

Does the public interest move the needle? We have

doubts that it moves much. While the public certainly has an

interest in saving jobs and helping Atlantic City’s often

sullied reputation, nothing before us indicates how many jobs

will be brought back of the 4,000 lost, as we were not told

what use Polo North intended for the sold assets. On the

other side, the public has a stake in protecting the rights of

tenants in commercial properties. Furthermore, public policy

strongly favors the correct application of the Bankruptcy

Code, especially where property rights are at stake. Overall,

though the public has an interest in preventing both outcomes,

we ultimately believe the short-term gain of some jobs in a

facility that is operational in some way tilts slightly in Revel’s

favor.

In any event, our ultimate conclusion need not rest

primarily on a rough estimation of whom the balance of

harms and public interest favor. For, along with IDEA’s

sufficient showing of irreparable harm to it should a stay not

be granted, success to it on the merits was assured. We

explain why below.

2. Has IDEA made a strong showing of its

likelihood of success on the merits?

IDEA makes three arguments before us on the merits,

but we need address only one: whether the Bankruptcy and

District Courts erred in holding that Revel met one of

§ 363(f)’s statutorily enumerated conditions to sell its assets

free and clear. Revel contends they didn’t err because IDEA

twice sought to establish (via declaratory judgment actions)

that it held a non-residential lease and Revel denied that

IDEA had a lease. In Revel’s view, this proves that a bona

fide dispute exists under § 363(f)(4), as “a declaratory

judgment is only proper when an actual ‘case or controversy’

exists.” Revel Br. 34. We disagree yet again.

28

As an initial matter, the mere filing of a declaratory

judgment action doesn’t itself create a bona fide dispute under

§ 363(f)(4), even if Article III’s “case or controversy”

requirement has been met. The latter ensures only that the

declaratory judgment plaintiff has standing and a redressable

injury. Further, that IDEA alleged (and Revel denied) the

former held a non-residential lease doesn’t mean there was a

bona fide dispute as to the validity of its lease. “Bona fide

dispute” in the § 363(f)(4) context means that there is an

objective basis—either in law or fact—to cast doubt on the

validity of IDEA’s purported lease. To satisfy that provision,

Revel needed to show there was some factual or legal basis to

deny that IDEA held a “true lease.” But it did nothing of the

sort.

First, a review of IDEA’s complaint makes plain that

its principal (and only) purpose was to invoke its rights under

§ 365(h) and “clarify its appurtenant rights for,” among other

things, “a utility easement,” not to litigate the nature of its

interest. Reply Br. 6; see also Oral Arg. Tr. 15:14–15

(counsel for IDEA noting that its suit was meant only to have

the Court “declare and enforce [IDEA’s] [] rights” under §

365(h)). The relevant paragraphs alleged the following:

125. [O]n or about May 12, 2012, [Revel]

and IDEA . . . entered into a lease for

nonresidential real property concerning certain

premises at the Casino.

126. On August 28, 2014, [Revel] filed the

Rejection Motion.

127. A hearing on the Rejection Motion is

currently scheduled for October[]7, 2014.

29

128. If the Rejection Motion is granted,

IDEA will have an opportunity to make an

election under Section 365(h) of the

Bankruptcy Code.

129. Section 365(h) . . . provides a lessee of

real property under a rejected lease with the

option of either retaining the estate, including,

among other things, the continued right to

possession or to treat the lease as terminated.

130. To the extent that IDEA elects to remain

in possession, § 365(h) . . . allows it, despite

rejection, to continue to enjoy its rights under

such lease that are in or appurtenant to the real

property, including the right to continued

possession, utilities and necessary easements.

Wherefore, [] IDEA seeks an order and judgment as

follows:

a. Declaring that, despite rejection of the

Lease, . . . IDEA may continue to enjoy its

right under the Lease, including the right

to continued possession, utility service and

necessary easements; and

b. Granting such other relief as is just.

Reply Br. 5–6 (emphasis omitted) (quoting Am. Compl. ¶¶

125–30, IDEA Boardwalk, LLC v. Revel Entm’t Grp., LLC,

No. 14-01756 (Bankr. D.N.J. Sept. 26, 2014), ECF No. 6).

Moreover, even if IDEA had squarely put the validity

of its lease at issue, nothing Revel said in response created an

objective legal dispute. Revel’s only argument was that its

agreement with IDEA doesn’t qualify as “a true lease”

30

because it “provides for ‘rent’ payments based entirely on a

percentage of the revenue derived from [IDEA’s operations]”

and contains “numerous [] examples of provisions atypical of

true leases.” Mot. to Dismiss ¶ 31, IDEA Boardwalk, LLC v.

Revel Entm’t Grp., LLC, No. 14-01756 (Bankr. D.N.J. Oct.

13, 2014), ECF No. 8. Yet Revel failed to cite a single

authority suggesting that a percentage-lease clause

disqualifies a purported lease from being one.

To leave no doubt that a true lease exists, IDEA’s

agreement with Revel bars any argument to the contrary. It

provides that

[n]othing contained in this Lease shall be

deemed or construed as creating the relationship

of . . . partnership or joint venture between the

parties hereto, it being understood and agreed

that neither the method of computing rent,

payment of the Tenant Fees nor any other

provision contained herein nor any acts of the

parties hereto shall be deemed to create any

relationship between the parties other than that

of Landlord and Tenant. The provisions of this

Lease relating to the Percentage Rent payable

hereunder are included solely for the purpose of

providing a method whereby adequate rent is to

be measured and ascertained.

Mot. to Dismiss Ex. A, at 56, IDEA Boardwalk, LLC v. Revel

Entm’t Grp., LLC, No. 14-01756 (Bankr. D.N.J. Oct. 13,

2014) (Section 21.12 of the Lease Agreement), ECF No. 8.

The only conclusion from this is that any dispute regarding

the validity of IDEA’s lease was fanciful if not

31

disingenuous. 12 As such, we part ways with the District

Court’s holding that IDEA’s declaratory judgment request

“provides some objective basis, at a minimum,” of a “bona

fide issue in dispute.” In re Revel, 525 B.R. at 29.

Before we conclude, we would be remiss if we did not

highlight the troubling consequences of Revel’s argument. If

whenever a lessee attempts to invoke its rights under § 365(h)

by asserting as a predicate that it holds a nonresidential lease,

12

Underscoring this is that, on June 24, 2015, the

Bankruptcy Court, per another Judge, concluded that Revel’s

agreement with IDEA constitutes a “true lease” under New

Jersey law and that § 365(h) protects its right “to remain in

possession for the balance of the terms set forth in the

Agreement[], and any renewal or extension period.” In re

Revel AC, Inc., 532 B.R. 216, 227, 229 (Bankr. D.N.J. 2015).

As to whether the agreement was a true lease, the Court said

the following:

[Polo North] places before the Court ample case

law supporting the contention that a court must

not be swayed by “form over substance” when

determining the existence of a true lease. While

this maxim is accurate, at some point form

becomes substance. We have reached that

point. The express terms of the Agreement[],

together with supporting affidavits, make it

clear that [Revel] and [IDEA] had the

unequivocal intention of entering into true lease

agreements.

Id. at 226.

32

every debtor would be well advised to file an answer denying

that the lease exists. Revel’s only response is that, by filing a

declaratory judgment action, IDEA is “affirmatively alleging,

subject to Rule 11, that there is a dispute as to that issue,” as

there needs to be “an actual case or controversy” in order to

have a declaratory judgment action. Oral Arg. Tr. 70:10–17.

That argument makes no sense. A declaratory judgment

plaintiff does not fall afoul of Rule 11 by making an

allegation in its complaint that it knows to be true. That rule

comes into play only where a plaintiff files a complaint

without basis in law or fact. Quite the opposite is what we

have here.

V. Conclusion

The factors favoring a stay weigh solidly with IDEA.

First, that it would prevail on the merits was all but assured

because nothing in the record casts doubt on the validity of its

lease with Revel, thus prohibiting the latter from invoking

§ 363(f) and selling its assets free of IDEA’s lease. Second,

IDEA demonstrated that, absent a stay, it would lose its club

business at the Casino, and this was sufficient to show

irreparable harm. On the balancing of harms, perhaps Revel

could have tilted the balance in its favor with its own showing

of irreparable harm, but it didn’t come close, as it relied only

on its counsel’s hollow representations of harm rather than

record evidence. Thus, while the public interest appears to

favor a stay denial, that alone doesn’t tip the four-factor

balance in Revel’s favor. We thus reverse and stay only the

part of the Sale Order that allows Revel to sell the Casino free

and clear of IDEA’s lease.

33

SHWARTZ, Circuit Judge, dissenting.

Mindful of the deference we owe to the District Court

under the applicable standard of review and the test for

obtaining a stay, I part company with the Majority and would

affirm the District Court’s order denying IDEA’s motion for a

stay of the sale order pending appeal.1 First, I disagree with

the Majority’s new interpretation of the requirements for

obtaining a stay. Second, I conclude that the District Court

thoroughly considered the entire record and all of the relevant

factors and acted within its discretion when it held that the

requirements to obtain a stay had not been satisfied. 2

The Majority’s “sliding scale” approach for obtaining

such equitable relief fails to honor our precedent’s

conjunctive four-part test to obtain a stay and it would permit

relief to be granted upon a particularly strong showing on just

a single factor, apparently even if at least one factor weighs

against the movant. To obtain a stay pending appeal, a

movant must demonstrate all four of the following elements:

(1) that it is likely to succeed on the merits; (2) that

irreparable harm will occur in the absence of a stay; (3) that

granting the stay will not result in greater harm to other

parties; and (4) that the public interest favors a stay. Hilton v.

1

As we must limit our review to the District Court’s

decision based on the facts it had before it at the time, I do

not—and cannot—consider events that arose thereafter.

2

Additionally, I would reach the issue of our

jurisdiction under 28 U.S.C. § 1292(a)(1) and conclude that

we do have jurisdiction under that statute. See Jackson v.

Danberg, 656 F.3d 157, 163 (3d Cir. 2011) (asserting

appellate jurisdiction over the denial of a stay or injunction).

1

Braunskill, 481 U.S. 770, 776 (1987); Jackson v. Danberg,

656 F.3d 157, 162 (3d Cir. 2011); Republic of Phil. v.

Westinghouse Elec. Corp., 949 F.2d 653, 658 (3d Cir. 1991).

Notwithstanding whatever extent to which these factors may

be “balanced” against one another such that a relatively

stronger showing on one may excuse a relatively weaker, but

still extant, showing on another, a complete failure to satisfy

any one of these factors precludes a stay. 3 See, e.g.,

NutraSweet Co. v. Vit-Mar Enters. Inc., 176 F.3d 151, 153

3

The Majority suggests that this Court has endorsed a

sliding scale approach in Constructors Association of Western

Pennsylvania v. Kreps, 573 F.2d 811 (3d Cir. 1978) and

Delaware River Port Authority v. Transamerican Trailer

Transport, Inc., 501 F.2d 917 (3d Cir. 1974). As noted in the

text, however, this Court has repeatedly emphasized that all

four factors must be independently satisfied to justify the

grant of preliminary equitable relief, and the Supreme Court

has presented the four-factor test as conjunctive, meaning that

all four factors must be satisfied to obtain a stay. See, e.g.,

Hilton, 481 U.S. at 776. Further, even to the extent that these

cases can be read to embrace a “sliding scale” or “balancing”

approach (which I do not necessarily view as equivalent),

neither states or implies that a movant’s complete failure to

satisfy any of the four factors can be excused. See Kreps, 573

F.2d at 815 (suggesting an injunction might be appropriate

even where the movant “did not demonstrate as strong a

likelihood of ultimate success as would generally be

required” if each of the other factors “strongly favor[s] the

moving party” (emphasis added)). In my view, an essential

prerequisite to “balancing” the factors is the requirement that

proof of each factor be presented and hence can be placed on

the scale.

2

(3d Cir. 1999) (“A plaintiff’s failure to establish any element

in its favor renders a preliminary injunction inappropriate.”);

Opticians Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d

187, 192 (3d Cir. 1990) (“Only if the movant produces

evidence sufficient to convince the trial judge that all four

factors favor preliminary relief should the injunction issue.”);

ECRI v. McGraw-Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987)

(vacating preliminary injunction based on “dispositive”

failure to satisfy one of the four factors).

Contrary to the Majority’s assertion, requiring a

movant to satisfy each factor is not unfair. Indeed, it is

warranted. Equitable relief, including injunctions and stays,

is an extraordinary remedy, Winter v. Natural Res. Def.

Council, Inc., 555 U.S. 7, 24 (2008), and movants must

accordingly meet a high bar to obtain it. Here, that means the

movant must satisfy all four requirements to obtain a stay.

See N.J. Hosp. Ass’n v. Waldman, 73 F.3d 509, 512-13 (3d

Cir. 1995) (stating that an “injunction shall issue only if the

plaintiff produces sufficient evidence to convince the district

court that all four factors favor preliminary relief” (quoting

Merchant & Evans, Inc. v. Roosevelt Bldg. Prods., 963 F.2d

628, 632-33 (3d Cir. 1992)). The Majority’s test weakens this

conjunctive test and makes it possible to, for example, obtain

a stay or injunction simply because a party has made a strong

showing on the merits, even though the harm that may befall

it is compensable with money. This possibility is contrary to

our precedent, which also requires an applicant seeking

injunctive relief to show irreparable harm. Frank’s GMC

Truck Center, Inc. v. Gen. Motors Corp., 847 F.2d 100, 102

& n.3 (3d Cir. 1987). Thus, the Majority’s approach makes it

more likely that what should be an extraordinary remedy will

3

be afforded on a more ordinary basis. 4 For these reasons, we

should not adopt the Majority’s version of the sliding scale

approach insofar as it excuses total failure to satisfy any one

of the four factors, and we should continue to apply the four-

factor test entrenched in binding precedent. If proof of each

factor is adduced, then a district court can and should

carefully consider each factor, accord each the weight it

believes appropriate in the particular case, and determine

whether, on balance, the extraordinary relief sought should be

granted.

That is exactly what the District Court did here. The

District Court carefully considered each of the factors and did

not abuse its discretion in determining that none were

satisfied. First, the District Court astutely acknowledged that

if the sale proceeded, IDEA would be no worse off than it

was at the time it made its request for relief. It was not

clearly erroneous for the District Court to find, based on the

facts before it, that IDEA was not conducting any business

because Revel was closed, and that IDEA would be unable to

conduct business if the sale fell through and Revel remained

closed.5 It also was not clearly erroneous for the District

Court to surmise that IDEA would likely not reopen its

business if the sale proceeded, and thus that allowing the sale

to proceed would cause it no additional harm. Moreover, any

4

In fact, in this case, the Majority granted a stay even

though it concluded that the public interest factor favored the

non-movant, and thus the four-factor test was not met.

5

The analysis might be different if the facility was

accessible and the lessee was operating, in which case a sale

free and clear of its interest could disrupt its business. This,

however, is not the case here.

4

injury to IDEA would be compensable with money. 6 While

collection may prove challenging, this hurdle is no different

from that facing any other unsecured creditor.

Second, it was not clearly erroneous for the District

Court to conclude that staying the sale would likely cause

greater harm to others, including the estate and other

creditors. Each month without a sale generated millions of

dollars in carrying costs to maintain the closed facility. These

expenditures depleted Revel’s assets and the District Court

correctly observed that a prompt sale would end these

expenditures. Moreover, the sale would provide an

immediate opportunity to obtain assets for the estate, which it

could then use to begin to repay its creditors. Thus, it was

reasonable for the District Court to conclude that a prompt

sale would both preserve existing and generate additional

estate assets, whereas staying the sale would continue to

dissipate estate funds and, at a minimum, delay the collection

of additional assets. Given Revel’s substantial challenges in

finding a prospective buyer, it was far from idle speculation

for Revel to fear that the loss of this buyer would significantly

delay its ability to satisfy its creditors. For these reasons, the

District Court acted within its discretion in denying the stay,

6

I recognize that, in exceptional circumstances,

economic loss that threatens a movant’s business can

constitute irreparable harm sufficient to enjoin an action that

poses such a threat, Minard Run Oil Co. v. U.S. Forest Serv.,

670 F.3d 236, 255 (3d Cir. 2012), but no evidence was

presented to show that the sale will cause such a loss. This is

not surprising because it was Revel’s closing, and not its sale,

that caused IDEA’s inability to operate.

5

as a stay would likely cause greater harm to others than the

absence of a stay would cause IDEA. 7

Third, the District Court had a sound basis to conclude

that granting the stay would not be in the public interest. As

stated above, Revel faced difficulties securing a buyer, and

having one in hand would certainly serve the public interest.

At the time, it appeared that allowing the sale to proceed

quickly would lead to the reopening of a large facility, which

had employed (and would likely again employ) thousands of

people. Thus, as even the Majority concedes, the sale

presented the opportunity for numerous jobs in an

economically depressed community. The District Court thus

did not err in finding that denying the stay is in the public

interest.

Finally, although the preceding analysis makes it

unnecessary to reach this factor, I would hold that the District

Court also appropriately concluded that IDEA did not

demonstrate a strong likelihood of success on the merits,

notwithstanding the Majority’s assertion that success on the

merits was “all but assured.” Since the Majority has focused

only on IDEA’s argument that the Bankruptcy Court erred in

7

Moreover, granting IDEA a stay would allow it to

interfere with the orderly collection and distribution of assets

and impact other creditors. IDEA is an unsecured creditor

and, in the normal course, would have to await satisfaction of

obligations to the secured creditors before it could be

compensated. The stay would enable IDEA to catapult ahead

of all other creditors, and place itself in a position to demand

satisfaction before them.

6

holding that Revel met one of 11 U.S.C. § 363(f)’s conditions

to sell its assets free and clear of IDEA’s lease, I will likewise

focus on this issue.

Under 11 U.S.C. § 363(e), an entity with “an interest

in property” that is proposed to be sold can request the

bankruptcy court to “prohibit or condition such . . . sale . . . as

is necessary to provide adequate protection of such interest.”

11 U.S.C. § 363(e). The trustee, however, may sell the

property “free and clear” if, among other things, “such

interest is in bona fide dispute.” 11 U.S.C. § 363(f)(4). The

issue before the District Court was whether the record before

it supported a finding that there was a bona fide dispute about

whether IDEA had a leasehold interest in the space it

occupied at Revel.

The Majority discounts the propriety of relying on

IDEA’s request for a declaratory judgment that it had a

nonresidential lease as reflecting a bona fide dispute. While

requesting a declaratory judgment alone does not

automatically mean a bona fide dispute exists, the District

Court here acted within its discretion to find a bona fide

dispute existed based on the pleadings and the declaratory

judgment IDEA sought. A declaratory judgment action asks

a court to “declare the rights and other legal relations of any

interested party seeking such declaration, whether or not

further relief is or could be sought.” 28 U.S.C. § 2201(a).

When determining whether to exercise jurisdiction under §

2201, a district court is to consider, among other things, “the

likelihood that a federal court declaration will resolve the

uncertainty of obligation which gave rise to the controversy.”

Reifer v. Westport Ins. Corp., 751 F.3d 129, 140 (3d Cir.

2014) (internal quotation marks omitted). Thus, it is fair to

7

infer that, if a party seeks a declaratory judgment, it believes

there is a dispute about a matter regarding which it seeks

certainty. Here, IDEA wanted to secure relief under § 363(e).

To do so, it needed a property interest. Aware that Revel may

attempt to characterize IDEA’s interest as a management

agreement or partnership rather than a leasehold interest, it

sought court intervention. These events provided the District

Court with sufficient grounds to find that there was a strong

likelihood that Revel would establish that there was a bona

fide dispute about IDEA’s interest in the property. While the

Majority questions whether the dispute was indeed bona fide

based upon the language of the lease agreement (and the

Bankruptcy Court’s finding months later concerning the

lease), I cannot say that the District Court abused its

discretion in relying on IDEA’s own pleadings, which

arguably conveyed its concern that Revel may dispute its

interest.8

For these reasons, the District Court appropriately

found that IDEA failed to satisfy any of the requirements

needed to obtain a stay, and I would affirm the District

Court’s order denying the motion to stay the sale pending

appeal.

8

The Majority also notes that the Bankruptcy Court

did not make explicit findings concerning the conditions

needed to adequately protect IDEA’s possessory interest.

Even assuming that its analysis lacked precision, this alone

does not mean that the District Court abused its discretion in

denying the stay.

8