On Sept. 30, 2015, the Third Circuit Court of Appeals in In re Revel AC Inc. issued a decision of significance to federal jurisprudence and bankruptcy practice. Hon. Thomas L. Ambro delivered the court’s opinion, reversing the bankruptcy court’s decision to deny a tenant a stay of a sale order pending appeal. Absent a stay of the sale order, the sale would close free and clear of the tenant’s possessory rights in its leasehold interest. The court determined that the tenant had sufficiently satisfied a sliding-scale approach to balancing the traditional four stay factors. The decision is especially relevant considering the current trend of using chapter 11 to accomplish sales of substantially all of the assets of an enterprise.

The Revel decision arose in the context of a serial chapter 11 filing by casino operator Revel AC Inc. and its affiliates (collectively, “Revel”). The latest proceeding involved Revel’s strategy to sell its property free and clear of interests under § 363, including, among the interests, the possessory rights of tenant IDEA Boardwalk LLC.

Originally published in ABI Journal, Vol. XXXV, No.1 on January 10, 2016.