2001 WL 34386709 (4th Cir.)

For opinion see 262 F.3d 295

 

United States Court of Appeals, Fourth Circuit.

 

Margaret GILCHRIST, et al.. Petitioning creditors in an involuntary bankruptcy

in the United States Bankruptcy Court for the southern District of Georgia,

Appellants,

v.

GENERAL ELECTRIC CAPITAL CORPORATION, Plaintiff-Appellee.

and

SPARTAN INTERNATIONAL, INCORPORATED; Cleveland Mills Company; Home Furnishings,

Incorporated; Avondale Mills, Incorporated, Defendants-Appellees,

and

Peter L. TOURTELOTT, Receiver, Appellee,

and

AVONDALE MILLS, INCORPORATED, Movant.

 

No. 01-1823.

July 16, 2001.

 

On Appeal from the United States District Court for the District of South Carolina

 

Brief of Appellants

 

Louis Saul, Joseph B. Mitchell, III, Saul & Mitchell, P.C., 404 Fifth Street, Augusta, GA 30901, (706) 722-6857, Counsel for Appellants.

John B. Long, Dye, Tucker, Everitt, Wheale & Long, Post Office Box 2426, Augusta, GA 30903-2426, (706) 722-0771, Counsel for Appellants.

James Thomas Wilson, Jr., Attorney at Law, Post Office Box 1212, augusta, GA 30903, (706) 722-4933, Counsel for Appellants.

 

*i TABLE OF CONTENTS

 

Table of Contents ... i

 

Table of Authorities ... iv

 

Jurisdictional Statement ... 1

 

Statement of the Issues ... 2

 

Statement of the Case ... 2

 

Statement of the Facts ... 3

 

Notice of Appeal ... 3

 

Summary of the Argument ... 10

 

Argument and Citation of Authorities ... 11

 

Standard of Review ... 11

 

Discussion of Issues ... 11

 

I. The Receivership Order issued May 22, 2001, does not prevent an involuntary bankruptcy petition. ... 11

 

A. The Receivership Order cannot bind parties without first affording notice and the opportunity to be heard. ... 11

 

B. The Petitioning Creditors in the involuntary case are not within the scope of the Receivership Order. ... 12

 

C. If the Receivership Order does not enjoin the filing of an involuntary petition, then the Automatic Stay imposed by 11 U.S.C. § 362 prevents further activity in the Receivership case. ... 14

 

*ii II. The permanent injunction issued June 11, 2001, is unenforceable against the involuntary bankruptcy petition. ... 15

 

A. The District Court cannot enjoin Petitioning Creditors' Federal right to file an involuntary bankruptcy petition. ... 15

 

B. The permanent injunction is unenforceable because the Order does not specify whether Petitioning Creditors are in civil or criminal contempt. ... 16

 

III. The temporary restraining order issued June 7, 2001, is technically flawed and should be vacated. ... 16

 

IV. The Appellants have standing to bring this appeal. ... 17

 

Conclusion ... 18

 

Statement Regarding Oral Argument ... 20

 

Certificate of Compliance ... 21

 

Certificate of Service ... 22

 

*iii TABLE OF AUTHORITIES

 

Cases

 

American Red Cross vs. Palm Beach, 143 F.3d 1407, 1411-1412 (11th Cir. 1998) ... 12, 13

 

CBS, Inc. v. Young, 522 F.2d 234 (6th Cir. 1975) ... 18

 

FDIC v. Faulkner, 991 F.2d 262, 267-268 (5th Cir. 1993) ... 13

 

In re Colonial Realty Co., 134 B.R. 1017, 1021 (Conn. 1991) ... 14

 

In re Dinnan, 625 F.2d 1146, 1149 (5th Cir. 1980) ... 16

 

In re Southeast Hotel Properties, Ltd. Partnership, 99 F.3d 151, 134 (4th Cir. 1996) ... 11

 

Jolly v. Pittore, 170 B.R. 793 (S.D.N.Y. 1994) ... 12

 

Parker v. United States, 153 F.2d 66, 70 (1st Cir. 1946) ... 16

 

Portland Feminist v. Advocates, 859 F.2d 681, 685 (9th Cir. 1989) ... 14

 

Regal v. NLRB, 324 U.S. 9, 14, 65 S.Ct. 478, 89 L.Ed.661 (1945) ... 13

 

Schmidt v. Lessar, 414 U.S. 473, 475-476, 94 S.Ct. 713, 38 l.Ed.2d 661 (1974) ... 12

 

Sunshine Development v. FDIC, 33 F.3d 106 (1st Cir. 1995) ... 14

 

United states v. Sherman, 581 F.2d 1358 (9th Cir. 1978) ... 18

 

U.S. v. Vanguard Investment Co., Inc., 907 F.2d 439 (4th Cir. 1990) ... 11, 13

 

*iv Statutes

 

11 U.S.C. § 105 ... 15

 

11 U.S.C. § 303 ... passim

 

11 U.S.C. § 303(a) ... 5

 

11 U.S.C. § 303(j) ... 9

 

11 U.S.C. § 362 ... 7, 9, 14

 

28 U.S.C. § 1292(a)(1) ... 1

 

28 U.S.C. § 1292(a)(2) ... 1

 

28 U.S.C. § 1332 ... 1

 

28 U.S.C. § 1334 ... 15

 

29 U.S.C. § 2101 ... 4

 

29 U.S.C. § 2104 ... 5

 

F.R.C.P. 65 ... 2, 17

 

F.R.C.P. 65(b)(2) ... 17

 

F.R.C.P. 65(c) ... 1

 

F.R.C.P. 65(d) ... 1, 12

 

Other Authorities

 

Moore's Federal Practice § 65.60(1) ... 13

 

*1 JURISDICTIONAL STATEMENT

This is an appeal from a final judgment and decision of the United States District Court for South Carolina entered June 11, 2001 finding Appellants in contempt of court and making permanent a temporary restraining order. 28 U.S.C. § 1332; 28 U.S.C. § 1292 (a) (1) and (a) (2).

This appeal is an appeal from a temporary restraining order issued by the District Court on June 7, 2001 and permanent order of contempt and injunction issued June 11, 2001. The appeal is by Appellants who were not a party to the district court suit and who were outside the District Court's jurisdiction. F.R.C.P. 65(c) (d); 28 U.S.C. § 1292 (a) (1) and (a)(2).

This appeal is an appeal from an order dated May 22, 2001 where a receiver was appointed and an injunction was issued against parties, not defendants in the District Court case. Appellants appeal the order in respect to its prohibition of filing an involuntary bankruptcy petition without agreement of the defendant in the District court case. The appeal was filed within 30 days of the order of injunction and receivership. Appealable under 28 U.S.C. § 292 (a); All writs orders - appealable 28 U.S.C. § 1651.

*2 STATEMENT OF THE ISSUES

1. Does the District Court's Receivership Order enjoin the filing of an involuntary bankruptcy filed pursuant to Congressionally mandated 11 U.S.C. § 303?

2. Were the Appellants subject to the District Court's order as parties, where Appellants were not in the jurisdiction, and were acting adversely to the parties and not in concert with either of them?

3. May a United States District Court issue a temporary restraining order without notice to parties, without a motion, without bond, without a verified petition, and without service of process upon Appellants?

4. May a District Court allow a secured creditor (GECC) to take charge of all assets of Spartan International, Inc., appoint a receiver picked by GECC and paid by GECC without notice to creditors and without bond in violation of F.R.C.P. 65?

 

STATEMENT OF THE CASE

General Electric Credit Corporation (GECC) filed a Receivership action in the United States District Court for the District of South Carolina on May 17, 2001. Without notice, the District Court granted the receivership petition on May 22, 2001. The Appellants filed an involuntary petition in the United States Bankruptcy Court for the Southern District of Georgia on May 31, *3 2001. The Bankruptcy Court held a hearing on June 6, 2001 that concluded on June 7, 2001. After losing the venue issue on June 6, the Receiver sought and received a temporary restraining order from the District Court for the District of South Carolina. The temporary restraining order enjoined the Petitioning Creditors in the bankruptcy case from proceeding with the bankruptcy case.

On June 11, 2001, the District Court entered a permanent injunction against the continuation of the bankruptcy case, found that the Petitioning Creditors were in contempt, and directed that the Petitioning Creditors withdraw the involuntary bankruptcy petition. To purge themselves of contempt, the petitioners filed a withdrawal. The Bankruptcy Court denied the withdrawal request and stayed bankruptcy proceedings pending further Order of a court of competent jurisdiction. Appellants filed a notice of appeal in the District Of South Carolina on June 15, 2001. The appeal was not docketed and Appellants filed an extraordinary motion with this Court. The appeal has now been docketed and scheduled on an expedited basis.

STATEMENT OF THE FACTS

The facts in this case should generally not be disputed. Spartan International, Inc. operated various cotton mills throughout Georgia, South Carolina and North Carolina, and abruptly closed without notice to its employees on May 4, 2001 *4 (JA12-13) following General Electric Capital Corporation's (GECC's) notifying all of those persons owing monies to Spartan, Inc. that they should direct payment to it. (JA11; JA731) There was no WARN notice given to the employees pursuant to 29 U.S.C. § 2101, et. seq. (JA12- 13). The employees of Spartan had a company-run health insurance employee benefit plan in which they and their employer made contributions. Medical benefits were abruptly terminated without notice. (JA12-13; JA538-539; JA710- 712).

On May 17, 2001, General Electric Capital Corporation ("GECC") filed a 2-count complaint in the United States District Court for the District of South Carolina based on diversity of citizenship against Spartan International, Inc. (Spartan) and two of its related entities, Cleveland Mills Company and Home Furnishings, Inc. (JA5-320). No other creditor of Spartan was made party to this lawsuit. (JAS). On that date, GECC filed a motion for the appointment of a receiver. (JA321).

On May 22, 2001, without any notice to any creditor or party in interest, the District Court appointed Mr. Tourtellot as receiver. (JA365). Mr. Tourtellot was selected by GECC as a proposed receiver and was paid by GECC. (JA722-723). The order entered by the district court on May 22, 2001 was prepared by GECC's lawyer and contained very broad language. (JA373). There was no specific injunction contained in the order that would have *5 prohibited any creditor or party in interest from instituting an involuntary bankruptcy proceeding under 11 U.S.C. § 303. (JA369). The order entered by the District court and prepared by GECC assumed (JA8) that GECC had a lien on all assets (JA8), had no provision for any creditor or party in interest attacking the lien position of GECC, provided for broad powers of the receiver to sell assets without any prior court approval and without any notice to creditors or parties in interest, had provisions for the receiver to be paid all without any notice to creditors or parties in interest, and had none of the safeguards generally associated with a bankruptcy liquidation. (JA365). On May 30, 2001, the receiver sold equipment and assets valued at $23.7 million in the Augusta King Mill facility for $4.1 million. (JA820). The receiver turned the proceeds of the sale over to GECC. (JA727).

On May 31, 2001, the Petitioning Creditors filed an involuntary bankruptcy proceeding in the United States Bankruptcy Court for the Southern District of Georgia (JA576), and filed an emergency motion requesting that an interim trustee be appointed (JA578-588) under 11 U.S.C. § 303(a) and requested that the interim trustee be required to pay the medical claims that were due or which would become due during the 60-day period of time required under 29 U.S.C. § 2104.

*6 The United States Bankruptcy Court for the Southern District of Georgia conducted an emergency hearing on June 6, 2001. (JA644-844). Prior to that hearing, GECC filed an objection to appointment of receiver (JA589) and a motion to dismiss or to transfer for improper venue and also requested that the Bankruptcy Court abstain. (JA609). After a lengthy hearing on June 6, 2001 (JA644-844), the bankruptcy court denied the motion to dismiss or transfer for improper venue; found that, based upon the evidence presented to the court, the majority of the assets of Spartan International, Inc. could be found within the Southern District of Georgia; denied the motion to transfer venue based upon the convenience of the parties; and denied the motion to abstain. (JA896-948). The Bankruptcy Court then proceeded into the motion to appoint an interim trustee. (JA949). The receiver's (Peter L. Tourletto's) attorney was present at the June 6, 2001 hearing. No objection to the proceedings was held by any part on the basis of a Receivership Order of May 22, 200 by the District Court. (JA644-896). On the afternoon of June 6, 2001, the Court continued the balance of the hearing until 5:00 p.m. on June 7, 2001. GECC knew who the Petitioning Creditors were on June 6, 2001 and who its attorneys were that represented them. (JA896-897).

*7 Without written petition or any notice to the Petitioning Creditors, the United States Trustee's Office or any other party involved in the bankruptcy court, Receiver Tourtellot obtained a temporary restraining order (JA374-415) from the United States District Court for the District of South Carolina restraining and enjoining the Petitioning Creditors from doing anything in furtherance of the bankruptcy proceeding (JA374-415), all without bond by the receiver or notice to any party. (JA374-415). At the time the June 7, 2001 order arrived at the bankruptcy court (JA921), all evidence had been presented and arguments had been completed. (JA907, JA916, JA921, JA925). The Bankruptcy Court recessed and returned and announced that the United States Bankruptcy Court was not enjoined (JA927-934); that the actions of the receiver to obtain the temporary restraining order were in violation of the automatic stay, 11 U.S.C. § 362 (JA929); that under authority of the 11th Circuit (JA643), any act done in violation of the automatic stay is void, and the proceeded to appoint an interim trustee. (JA640-643). A written order was entered on June 8, 2001 (JA643) and the interim trustee was ordered to show cause on June 9, 2001 why he should not pay the medical claims of the Petitioning Creditors. (JA640-643).

*8 A hearing was scheduled by the United States District Court for the District of South Carolina on June 11, 2001. (JA374-376).

At the hearing before the United States Bankruptcy Court for the Southern District of Georgia on June 9, 2001, the trustee who was appointed, Mr. Wallace, asked for a continuance from the Bankruptcy Court in order to conduct research on the matter. The continuance was granted. (JA949-958).

On June 11, 2001, the United States District Court for the District of South Carolina held a hearing (JA432) clarified its May 22, 2001 order, stated that the Petitioning Creditors were enjoined, stated that they were in contempt, and held the Petitioning Creditors in contempt and ordered that they purged themselves of the contempt by filing a withdrawal of the bankruptcy within 5 days of the Court's June 11, 2001 order. (JA559-566). The June 11, 2001 order of the District Court did not specify whether Petitioning Creditors were in civil or criminal contempt. (JA559-566).

On June 15, 2001, a notice of appeal was filed with the United States District Court for the District of South Carolina appealing the orders of May 22, 2001 appointing a receiver and issuing an injunction, and orders of June 7, 2001 and June 11, 2001 granting injunctive relief. (JA567-572). A withdrawal or *9 motion to dismiss the involuntary bankruptcy was filed by Petitioning Creditors (because of the contempt order of June 11, 2001 within the 5-day period on June 15, 2001, after the appeal to the Fourth Circuit Court of Appeals had been filed. (JA965). This withdrawal did not dismiss the bankruptcy because 11 U.S.C. § 303(j) provides that a court may dismiss an involuntary petition after notice to all creditors and a hearing. The Bankruptcy Court entered an order not to dismiss the involuntary case. (JA993-1011).

After filing the notice of appeal, the Clerk of the United States District Court for the District of South Carolina informed one of the attorneys for the Petitioning Creditors that the district Court would not allow the appeal and that the Petitioning Creditors had three alternatives: a) to ask for permission to be relieved of the May 22, 2001 order; (b) to file a motion to intervene; or c) to ask for permission to appeal.

In the interim, proceedings are continuing in the United States District Court for the District of South Carolina to authorize the receiver to continue to sell property despite the fact that this might be in apparent violation of the stay issued by the United States Bankruptcy Court for the Southern District of Georgia under 11 U.S.C. § 362. (JA993). The U.S. Bankruptcy Court issued an order on June 28, 2001 (JA993-1013) staying all *10 further proceedings until a higher court of record entered an appropriate order. Appellants brought an extraordinary motion to this court ask this Court to set aside the order of the U.S. District of South Carolina and requesting that this Court order that the District Court transmit the information necessary for this Court to handle the appeal to this Court. This Court required the District Court Clerk to forward the appeal. This court did not stay the District Court's injunctions, but expedited this appeal.

NOTICE OF APPEAL TO THE FOURTH CIRCUIT

On June 15, 2001, the Appellants timely filed a notice of appeal to this Court from the U.S. District Court's orders of May 22, 2001, June 7, 2001 and June 11, 2001.

SUMMARY OF THE ARGUMENT

The District Court committed reversible error by its order of May 22, 2001 appointing a Receiver and enjoining non-parties without notice and opportunity to be heard; erred in issuing its June 7, 2001 temporary restraining order without written petition, notice to known parties, without bond, and without hearing; erred in the order issued June 11, 2001 hold Appellants in contempt and not specifying civil or criminal contempt.

*11 ARGUMENT AND AUTHORITIES

Standard of Review

Legal conclusions are reviewed de novo. In re Southeast Hotel Properties, Ltd. Partnership, 99 F.3d 151, 134 (4th Cir. 1996).

Discussion of Issues

I. The Receivership Order issued May 22, 2001, does not prevent an involuntary bankruptcy petition.

In United States v. Vanguard Investment Co., Inc., 907 F.2d 439 (4th Cir. 1990), this Court held that a Receivership Order prevented a voluntary bankruptcy petition being filed on behalf of the debtor corporation. This Court left open the question of whether a Receivership Order would prevent an involuntary bankruptcy petition from being filed. For the reasons that follow, Appellants urge this Court to find that a Receivership Order does not prevent an involuntary bankruptcy petition.

A. The Receivership Order cannot bind parties without first affording notice and the opportunity to be heard.

The Vanguard case and others prevent certain officers, directors and partners from instituting voluntary bankruptcy proceedings after a Receiver has been appointed. See also, *12 Jolly v. Pittore, 170 B.R. 793 (S.D.N.Y. 1994). This line of authority involves parties who had been notified and appeared at the Receivership proceedings. The rationale appears to be that the Receivership vests power in the Receiver to operate the debtor-business and strips the officers and partners of their powers.

Appellants are unable to direct the Court to a case in which a Court enjoined creditors from filing an involuntary bankruptcy petition if the creditors were not parties to the Receivership action. The secured creditor, GECC, sought to affect the rights of at least 6,500 creditors. The secured creditor had access to all of the debtor's records and could have provided notice to the creditors of the pending complaint seeking a Receivership Order. The secured creditor and the debtor were the only parties with knowledge that the Receiver was to be appointed. The secured creditor selected the Receiver appointed by the Court.

B. The Petitioning Creditors in the involuntary case are not within the scope of the Receivership Order.

The injunction under F.R.C.P. 65(d) is required to be specific. The injunction must set forth the reason for being enjoined. See, American Red Cross vs. Palm Beach, 143 F.3d 1407, 1411-1412 (11th Cir. 1998); *13Schmidt v. Lessar, 414 U.S. 473, 475-476, 94 S.Ct. 713, 38 L.Ed.2d 661 (1974). See, Moore's Federal Practice § 65.60(1). The Eleventh Circuit has held that "a court must craft its orders so that those who seek to obey may know precisely what the Court intends to forbid." American Red Cross at 1411. The Receivership Order does not specifically prohibit the filing of an involuntary bankruptcy case.

Appellants did not then and do not now believe that a court can issue a broad injunction against those not acting in concert with parties that prevents an involuntary bankruptcy. U.S. v. Vanguard Investment Co., Inc., 907 F.2d 439 (4th Cir. 1990)

No party in either the District Court case or in the United States Bankruptcy Court case construed the District Court's order of May 22, 2001 as an injunction prohibiting an involuntary bankruptcy filing. Only after the Bankruptcy Court on June 6, 2001 denied the motion to change venue or to abstain did the Appellees raise the injunction issue of the May 22, 2001 order of the District Court. See, Regal v. NLRB, 324 U.S. 9, 14, 65 S.Ct. 478, 89 L.Ed.661 (1945). Appellants' interests are adverse to both the debtor corporation and to the party filing the Receivership action. In Order to be within the scope of the injunction, Appellants would have to be acting "in concert" with Spartan. See, *14FDIC v. Faulkner, 991 F.2d 262, 267-268 (5th Cir. 1993); Portland Feminist v. Advocates, 859 F.2d 681, 685 (9th Cir. 1989).

Neither the case law nor the Receivership Order prohibits an involuntary bankruptcy case. The Appellants should be free to exercise the rights afforded by Congress. The Receivership Order should be vacated to the extent that it seeks to prevent an involuntary bankruptcy petition.

C. If the Receivership Order does not enjoin the filing of an involuntary petition, then the Automatic Stay imposed by 11 U.S.C. § 362 prevents further activity in the Receivership case.

The filing of the involuntary petition invokes the automatic stay imposed by 11 U.S.C. § 362. Section 362 enjoins the continuance of any proceeding against the debtor or property of the debtor. "The automatic stay provisions do not constitute a 'right' of a trustee, but a congressionally-mandated restraint that springs into existence upon the filing of a bankruptcy case. In re Colonial Realty Co., 134 B.R. 1017, 1021 (Conn. 1991). In Sunshine Development v. FDIC, 33 F.3d 106 (1st Cir. 1995), the Court held that the automatic stay prevented the FDIC from going forward as a Receiver to foreclose on security stating "[w]e see no basis for exempting the FDIC from the strictures of this regime when it is acting as a Receiver or as *15 a conservator." Id. at 114. The Court continued that "the automatic stay is exactly what the name implies -- 'automatic' - it operates without the necessity for judicial intervention. Id. The automatic stay "arises directly from the operation of a legislative enactment, not by Court Order." Id. "The broad jurisdictional grant of 28 U.S.C. § 1334 is designed to centralize proceedings in the bankruptcy court and 11 U.S.C. 105 is designed to permit the court to protect that grant." Id.

The Receivership Order entered by the District Court is vague and unenforceable as to an involuntary petition. The filing of the involuntary petition stays the proceedings in the District Court.

II. The permanent injunction issued June 11, 2001, is unenforceable against the involuntary bankruptcy petition.

A. The District Court cannot enjoin Petitioning Creditors' Federal right to file an involuntary bankruptcy petition.

Congress granted creditors the right to file an involuntary bankruptcy petition against a debtor. 11 U.S.C. § 303. Congressional intent to permit such an action is abundantly clear. Congress could have chosen to permit involuntary cases only if a Receivership had not yet been commenced but chose not to do so. Public policy favors the orderly liquidation of *16 assets through the supervision of the bankruptcy court. The Receivership action is an overt attempt by the secured creditor to circumvent the rights granted by Congress. The District Court's Order preventing exercise of rights under 11 U.S.C. 303 is unenforceable and should be reversed.

B. The permanent injunction is unenforceable because the Order does not specify whether Petitioning Creditors are in civil or criminal contempt.

An Order for contempt must specify whether the parties are in civil or criminal contempt. See, Parker v. United States, 153 F.2d 66, 70 (1st Cir. 1946), In re Dinnan, 625 F.2d 1146, 1149 (5th Cir. 1980). A party cited with contempt must be advised of the nature of the contempt. The permanent injunction issued June 11, 2001, fails to specify whether the Petitioning Creditors are in civil or criminal contempt. This flaw is fatal to the Order. The Order should be vacated.

III. The temporary restraining order issued June 7, 2001, is technically flawed and should be vacated.

The District Court issued the temporary restraining order without a pleading being filed, without notice to known parties, without a bond and without the opportunity to be heard. The Receiver sought a temporary restraining order on June 7, 2001, after arguing the venue issue in the Bankruptcy Court on June 6, *17 2001. The Bankruptcy Court held that venue was proper in Georgia due to a lack of evidence put forth by the debtor or the Receiver.

Having lost on the venue issue in Georgia, the Receiver returned to the South Carolina District Court seeking the temporary restraining order. Rule 65(b) (2) requires that the moving party certify in writing what efforts have been made to notify known parties and certify the reasons why notice should not be given. Despite having been in court with Appellants for the majority of the day on June 6th, the Receiver sought the temporary restraining order with out even a phone call to any of Appellants' counsel.

The District Court docket reveals that no pleading was filed requesting the temporary restraining order. The District Court issued the temporary restraining order without affording the targeted parties the opportunity to be heard. The Receiver. violated the letter and spirit of Rule 65. The Receiver did not post a bond. The posting of a bond is required under Rule 65. This technical defect is fatal to the temporary restraining order.

IV. The Appellants have standing to bring this appeal.

Entities subject to an Order may appeal the Order. The Appellants have been held in contempt and enjoined from further *18 activity in the bankruptcy case as set forth in the District Court's Order of June 11, 2001. This contempt finding and injunctive relief give rise to the right to appeal regardless of whether the entities enjoined are parties to the underlying action. See United states v. Sherman, 581 F.2d 1358 (9th Cir. 1978) and CBS, Inc. v. Young, 522 F.2d 234 (6th Cir. 1975).

CONCLUSION

For the reasons stated in this brief, as appear in the record, and as will be stated at oral argument, the Appellants respectfully request this Court to reverse or vacate the District Court's Orders issued May 22, 2001, June 7, 2001, and June 11, 2001. The Appellants respectfully request this Court to hold that a Receivership action does not prohibit the filing of an involuntary petition and to allow the bankruptcy case to proceed.

*20 STATEMENT REGARDING ORAL ARGUMENT

Oral argument has been scheduled before this Court for August 2, 2001.