Gilchrist v. General Electric Capital Corp.

2001 WL 34386710 (4th Cir.)

For opinion see 262 F.3d 295

Briefs and Other Related Documents

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,

GENERAL ELECTRIC CAPITAL CORPORATION, Plaintiff-Appellee,

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

Incorporated, Defendants-Appellees,

Peter L. TOURTELLOT, Receiver, Appellee,

AVONDALE MILLS, INCORPORATED, Movant.

No. 01-1823.

July 26, 2001.

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

Joint Brief of Plaintiff - Appellee General Electric Capital Corporation and

Appellee Peter L. Tourtellot, Receiver

James A. Pardo, Jr., Sarah Robinson Borders, Mark M. Maloney, Brian C. Walsh, King & Spalding, 191 Peachtree Street, Atlanta, Ga. 30303, (404) 572-4600, Attorneys for Plaintiff - Appellee General Electric Capital Corp.

Paul R. Hibbard, Johnson, Smith, Hibbard & Wildman, L.L.P., 220 North Church Street, Spartanburg, S.C. 29306, (864) 582-8121, Attorneys for Plaintiff - Appellee General Electric Capital Corp.

Robert L. Widener, Michael M. Beal, McNair Law Firm, P.A., 1301 Gervais Street, Columbia, S.C. 29201, (803) 799-9800, Attorneys for Appellee Peter L. Tourtellot.

*i TABLE OF CONTENTS

Table of Authorities ... iii

Jurisdictional Statem ent ... 1

Issues Presented for Review ... 3

Statement of the Case ... 4

Statement of Facts ... 6

Summary of Argument ... 14

Argument ... 16

Standard of Review ... 16

Introduction ... 16

I. BECAUSE THE APPELLANTS LACK STANDING TO APPEAL, THE APPEAL MUST BE DISMISSED ... 17

A. A Nonparty Lacks Standing to Appeal, Even If the Nonparty Is Subject to a Receivership Injunction ... 17

B. The Appellants Mooted Any Appealable Issues By Purging Their Contempt of Court ... 19

C. The Only Authority Cited by the Appellants Undercuts Their Standing Argument ... 20

II. THE DISTRICT COURT HAD THE POWER TO ENTER THE ORDERS THAT ARE THE SUBJECT OF THIS APPEAL AND EXERCISED ITS DISCRETION APPROPRIATELY ... 22

A. Because the Appellants Have Raised No Issues Whatsoever Before the District Court, This Court's Review on Appeal Is for Plain Error ... 22

B. The District Court Had the Authority To Issue the Receivership Order and To Enforce Its Injunction Against the Appellants ... 25

*ii 1. Federal Receivership Courts Have Broad Injunctive Powers, Including the Power To Prevent Nonparties From Interfering With the Receivership ... 25

2. Rule 65(d) Does Not Restrict a Receivership Court's Injunctive Powers ... 27

C. The District Court Was Authorized To Preclude the Filing of an Involuntary Bankruptcy Petition Without Leave of Court ... 30

1. A Receivership Court Has the Power To Protect Its Exclusive Jurisdiction Against Interference, Including Attempts To Invoke the Jurisdiction of Another Court ... 31

2. Contrary to the Appellants' Suggestion, Other Courts Have Issued and Upheld Injunctions Against Involuntary Bankruptcy Petitions ... 35

3. The District Court Should Be Permitted To Exercise Its Discretion as to Whether an Involuntary Bankruptcy Case Should Proceed ... 39

III. THE MISCELLANEOUS OTHER ISSUES RAISED BY THE APPELLANTS ARE EITHER IRRELEVANT OR UNAVAILING ... 42

A. The Automatic Stay Does Not Affect the District Court's Power To Enforce Its Injunction ... 41

B. The Appellants' Contempt Citation Was Obviously for Civil Contempt, But Is Subject to Clarification If Necessary ... 43

Conclusion ... 44

Certificate of Compliance

Certificate of Service

Addendum

Note: Table of Contents page numbers missing in original document

*iii TABLE OF AUTHORITIES

Cases

Adams v. United States ex rel. McCann, 317 U.S. 269 (1942) ... 35

Adkins v. North Carolina Attorney General, No. 00-7286, 2000 WL 1875974 (4th Cir. Dec. 27, 2000), cert. denied, 121 S. Ct. 1623 (2001) ... 19

In re Baldwin-United Corp. Litigation, 765 F.2d 343 (2d Cir. 1985) ... 42

In re Baldwin-United Corp., 770 F.2d 328 (2d Cir. 1985) ... 29

Bayard v. Lombard, 50 U.S. (9 How.) 530 (1850) ... 17

Berry v. Bean, 796 F.2d 713 (4th Cir. 1986) ... 20

Brock v. Morysville Body Works, Inc., 829 F.2d 383 (3d Cir. 1987) ... 42

Buckhannon & N. R.R. Co. v. Davis, 135 F. 707 (4th Cir. 1905) ... 31-32

In re Campbell, 628 F.2d 1260 (9th Cir. 1980) ... 20

Carbon Fuel Co. v. United Mine Workers, 517 F.2d 1348 (4th Cir. 1975) ... 43

CBS, Inc. v. Young, 522 F.2d 234 (6th Cir. 1975) ... 21

*iv In re Celotex Corp., 124 F.3d 619 (4th Cir. 1997) ... 16, 23, 24, 41

Celotex Corp. v. Edwards, 514 U.S. 300 (1995) ... 34

City of Orangeburg v. Southern Ry. Co., 134 F.2d 890 (4th Cir. 1943) ... 32

In re Cordova Gonzalez, 726 F.2d 16 (1st Cir.), cert. denied, 466 U.S. 951 (1984) ... 20

Davis v. Scott, 176 F.3d 805 (4th Cir. 1999) ... 19

Eller Industries, Inc. v. Indian Motorcycle Mfg., Inc., 929 F. Supp. 369 (D. Colo. 1995) ... 26, 27, 31

Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531 (4th Cir. 2000) ... 23

In re Energy Cooperative, Inc., 886 F.2d 921 (7th Cir. 1989) ... 30

FDIC v. American Bank Trust Shares, Inc., 629 F.2d 951 (4th Cir. 1980) ... 26

In re First Commodity Corp. of Boston Customer Accounts Litigation, 89 B.R. 283 (D. Mass. 1988) ... 36, 37

FTC v. Productive Marketing, Inc., 136 F. Supp. 2d 1096 (C.D. Cal. 2001) ... 28, 29

In re Glover, 205 F.3d 1333 (4th Cir. 2000) ... 21

*v GTE Sylvania, Inc. v. Consumers Union, 445 U.S. 375 (1980) ... 34

In re Hunt, 754 F.2d 1290 (5th Cir. 1985) ... 20

Hunt v. Bankers Trust Co., 799 F.2d 1060 (5th Cir. 1986) ... 40

In re Jamesway Corp., 235 B.R. 329 (Bankr. S.D.N.Y. 1999) ... 39

Kenny v. Quigg, 820 F.2d 665 (4th Cir. 1987) ... 19

Kerr v. United States Dist. Court, 426 U.S. 394 (1976) ... 21

In re Kitty Hawk, Inc., 255 B.R. 428 (Bankr. N.D. Tex. 2000) ... 39

Ledbetter v. Farmers Bank & Trust Co., 142 F.2d 147 (4th Cir.), cert. denied, 323 U.S. 719 (1944) ... 26

Lias v. United States, 196 F.2d 90 (4th Cir. 1952) ... 23, 25

Local 217 v. MHM, Inc., 976 F.2d 805 (2d Cir. 1992) ... 39

In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litigation, 140 B.R. 969 (N.D. Ill. 1992) ... 42

In re Marc Rich & Co. A.G., 739 F.2d 834 (2d Cir. 1984) ... 43

*vi Marino v. Ortiz, 484 U.S. 301 (1988) ... 17, 19

Mays v. Harris, 523 F.2d 1258 (4th Cir. 1975) ... 35

MDK, Inc. v. Mike's Train House, Inc., 27 F.3d 116 (4th Cir.), cert. denied, 513 U.S. 1000 (1994) ... 19

Newberry v. Davison Chemical Co., 65 F.2d 724 (4th Cir.), cert. denied, 290 U.S. 660 (1933) ... 18

Penn General Casualty Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189 (1935) ... 32

Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468 (9th Cir.), cert. denied, 506 U.S. 903 (1992) ... 43

RTC v. Fountain Circle Associates L.P., 799 F. Supp. 48 (N.D. Ohio 1992) ... 26

Schwartz v. Randolph, 72 F.2d 892 (4th Cir. 1934) ... 26-27

Seattle-First Nat'l Bank v. Manges, 900 F.2d 795 (5th Cir. 1990) ... 30

SEC v. Arkansas Loan & Thrift Corp., 427 F.2d 1171 (8th Cir. 1970) ... 23

SEC v. Bowler, 427 F.2d 190 (4th Cir. 1970) ... 25

SEC v. Lincoln Thrift Association, 577 F.2d 600 (9th Cir. 1978) ... 37

*vii SEC v. Universal Financial, 760 F.2d 1034 (9th Cir. 1985) ... 28

SEC v. Wencke, 622 F.2d 1363 (9th Cir. 1980) ... 27, 28

United States ex rel. Louisiana v. Boarman, 244 U.S. 397 (1917) ... 17

United States ex rel. Rahman v. Oncology Associates, P.C., 198 F.3d 502 (4th Cir. 1999) ... 21

United States ex rel. SEC v. Carter, 907 F.2d 484 (5th Cir. 1990) ... 36

United States v. Blackwell, 694 F.2d 1325 (D.C. Cir. 1982) ... 41

United States v. Brewer, No. 98-4833, 1999 WL 713892 (4th Cir. Sept. 14, 1999) ... 24

United States v. David, 83 F.3d 638 (4th Cir. 1996) ... 41

United States v. ESIC Capital, Inc., 675 F. Supp. 1462 (D. Md. 1987) ... 27

United States v. Hall, 472 F.2d 261 (5th Cir. 1972) ... 28, 29

United States v. Kras, 409 U.S. 434 (1973) ... 34

United States v. New York Tel. Co., 434 U.S. 159 (1977) ... 29, 35

United States v. Olano, 507 U.S. 725 (1993) ... 16

*viii United States v. Paccione, 964 F.2d 1269 (2d Cir.), cert. denied, 505 U.S. 1220 (1992) ... 20

United States v. Sherman, 581 F.2d 1358 (9th Cir. 1978) ... 21

United States v. Stitt, 250 F.3d 878 (4th Cir. 2001) ... 23

United States v. Turman, 122 F.3d 1167 (9th Cir. 1997) ... 41

United States v. Vanguard Investment Co., 907 F.2d 439 (4th Cir. 1990) ... 35

United States v. Vanguard Investment Co., 667 F. Supp. 257 (M.D.N.C. 1987), aff'd, 907 F.2d 439 (4th Cir. 1990) ... 37, 38

Walker v. City of Birmingham, 388 U.S. 307 (1967) ... 34

Wannamaker v. Eaves, 79 F.2d 553 (4th Cir. 1935) ... 32

Willcox v. Jones, 177 F. 870 (4th Cir. 1910) ... 26

Williams v. Department of Veterans Affairs, 104 F.3d 670 (4th Cir. 1997) ... 23

*ix Statutes

11 U.S.C. § 303(b)(1) ... 33

11 U.S.C. § 362 ... 42

11 U.S.C. § 507(a)(1) ... 39

11 U.S.C. § 507(a)(3) ... 39

28 U.S.C. § 754 ... 7, 33

28 U.S.C. § 959(a) ... 33

28 U.S.C. § 1292(a) ... 1

28 U.S.C. § 1332(a) ... 1

28 U.S.C. § 1651 ... 29

28 U.S.C. § 2072 ... 33

29 U.S.C. § 2101 ... 8

Other Authorities

Federal Rule of Appellate Procedure 3(c)(1)(A) ... 17

Federal Rule of Civil Procedure 60(b) ... 21

Federal Rule of Civil Procedure 65(d) ... passim

Federal Rule of Civil Procedure 65.1 ... 34

Federal Rule of Civil Procedure 66 ... 27, 28, 33

13 Moore's Federal Practice § 66.04[1][b] (3d ed. 1997) ... 25

13 Moore's Federal Practice § 66.06[1][c] (3d ed. 1997) ... 26

*1 JURISDICTIONAL STATEMENT

The District Court has jurisdiction over this civil action pursuant to 28 U.S.C. § 1332(a) because it is between citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. As of the commencement of this action, Plaintiff General Electric Capital Corporation ("GE Capital") was a New York corporation with its principal place of business in Connecticut; Defendant Spartan International, Inc. ("Spartan") was a South Carolina corporation with its principal place of business in South Carolina; Defendant Cleveland Mills Company ("Cleveland") was a Delaware corporation with its principal place of business in North Carolina; and Defendant Home Furnishings, Inc. ("Home Furnishings") was a Delaware corporation with its principal place of business in South Carolina.

This Court has jurisdiction over this appeal in the sense that the orders appealed from include an order appointing a receiver and a preliminary injunction, both of which are appealable interlocutory orders under 28 U.S.C. § 1292(a). However, because Appellants Margaret Gilchrist and others (the "Appellants") have not intervened or otherwise become parties to this action, they do not have standing to appeal.

*2 The Appellants submitted a notice of appeal for filing on or about June 15, 2001, within thirty days of the entry of the orders appealed from. This notice of appeal has been treated as if it were filed on June 15, 2001.

*3 ISSUES PRESENTED FOR REVIEW

1. May a non-party appeal an order of a district court without intervening in the case or seeking any relief whatsoever from the district court?

2. May a district court with in rem jurisdiction over property in a receivership action enjoin interested persons from taking actions inconsistent with the court's jurisdiction without prior leave?

*4 STATEMENT OF THE CASE

This is an interlocutory appeal in a receivership action. Following an evidentiary hearing, the District Court appointed a receiver for the businesses and properties of Spartan, Cleveland, and Home Furnishings and enjoined all persons from, among other things, commencing or prosecuting any action that affected Spartan or its receivership estate. The Appellants, who had a copy of the District Court's Order Appointing Receiver dated May 22, 2001 (the "Receivership Order"), subsequently commenced an involuntary bankruptcy case against Spartan in the United States Bankruptcy Court for the Southern District of Georgia.

The receiver appointed by the District Court, Appellee Peter L. Tourtellot (the "Receiver"), obtained a temporary restraining order on June 7, 2001 (the "TRO"), prohibiting the Appellants from taking further action in the involuntary bankruptcy case until a hearing could be held four days later. In an order following the June 11 hearing (the "June 11 Order"), the District Court found the Appellants in contempt of its Receivership Order and ordered that any person desiring to proceed in bankruptcy court was required to apply to the District Court for leave to do so.

*5 The Appellants withdrew their involuntary bankruptcy petition, thereby satisfying the District Court's condition for purging their contempt. They also submitted a notice of appeal of the Receivership Order, the TRO, and the June 11 Order. This notice of appeal has now been docketed.

The Appellants sought a stay pending appeal from this Court. Following briefing by the parties, the Court denied a stay pending appeal by order dated July 6, 2001.

Defendants-Appellees Spartan International, Incorporated, Cleveland Mills Company, and Home Furnishings, Incorporated are not participating in this appeal. Accordingly, the term "Appellees" as used in this brief refers to GE Capital and the Receiver.

*6 STATEMENT OF FACTS

The factual and procedural background of this matter can be broken down into four stages: (1) the District Court's appointment of the Receiver to marshal and liquidate the assets of Spartan and its affiliates for the benefit of their creditors; (2) the Appellants' efforts to initiate a bankruptcy case in the Southern District of Georgia against Spartan; (3) the District Court's orders in response to the Appellants' actions; and (4) the Appellants' conduct in reaction to the District Court's orders, including their appeal to this Court.

1. After Spartan closed its doors and terminated its employees on May 3, 2001, it turned over possession of its assets to GE Capital (JA 12-13), which holds a perfected security interest in substantially all of Spartan's assets. (JA 9.) Shortly thereafter, GE Capital sought the appointment of a receiver to protect, administer, and liquidate the assets of Spartan and its affiliates, and GE Capital proposed an individual who was experienced in the textile industry to serve as receiver. (JA 14, 318-19.) On May 22, 2001, the District Court heard oral argument, took evidence with respect to the matters before it, examined the proposed receiver, and allowed other interested parties (including another creditor) to examine the proposed receiver and otherwise present argument and evidence. (JA 326-64.) At the conclusion of the hearing, the District Court decided, based on the evidence presented, the applicable law, the experience of the proposed receiver, and the *7 bond to be posted, that it was appropriate for the benefit of all creditors to appoint the Receiver and entered the Receivership Order. (JA 364, 365-73.) The District Court also specifically ordered the Receiver to serve a copy of the Receivership Order on all ascertainable creditors (including former employees) of Spartan, and the Receiver did so by serving approximately 6500 such creditors within ten business days. (JA 373, 450-51.) The Receiver filed a copy of the Receivership Order with the Clerk of the United States District Court for the Southern District of Georgia on May 30, 2001, as required by 28 U.S.C. § 754. (JA 490.)

2. Paragraph 5 of the Receivership Order provides that all persons receiving notice of the Receivership Order

are enjoined from in any way commencing or prosecuting any action, suit or proceeding that affects the Receiver Estates or the Defendants, including, but not limited to, (a) any action attempting to foreclose, forfeit, alter or terminate any interest of the Defendants or the Receiver Estates in any property; (b) any action to create, perfect or enforce any lien or judgment against property of the Receiver Estates; or (c) any action to obtain possession of, or exercise control over any property of the Receiver Estates, in all cases whether such acts are part of a judicial proceeding or otherwise. [FN1]

FN1. As the District Court noted in the June 11 Order, this injunction was designed to allow the District Court "to discharge its duties and to prevent creditors of [Spartan] from collaterally attacking the [District Court's] order appointing receiver." (JA 562.) As the District Court further explained, its expectation "[a]t a minimum" was that any party wanting to file a bankruptcy petition against Spartan in another jurisdiction would seek leave from the District Court prior to doing so.

(JA 562-63.)

*8 (JA 369, emphasis added.) Counsel for the Appellants stipulated before the District Court that he received actual notice of the Receivership Order, including the injunction, the day after its entry, on May 23, 2001. (JA 444, 560.) The Appellants did not seek direction or clarification from the District Court regarding the effect of this injunction on their desire to file an involuntary bankruptcy petition against Spartan. Instead, eight days after receiving a copy of the injunction, the Appellants filed such a petition in the Southern District of Georgia, accompanied by an emergency motion seeking the appointment of an interim trustee and the immediate payment of medical benefits allegedly due to former employees of Spartan, including the Appellants, under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (JA 576, 578.) Following an initial hearing in bankruptcy court, during which the Receiver's counsel was not permitted to address the court (JA 652- 53), the Receiver applied for and obtained a temporary restraining order from the District Court prohibiting the Appellants and their counsel from proceeding further in the bankruptcy case until a hearing could be held on June 11, four days later. (JA 374-76.) Again the Appellants chose not to seek relief or clarification from the District Court. Rather, upon learning of the TRO, counsel for the Appellants told the bankruptcy court that "notwithstanding the injunction," he intended to move forward with the bankruptcy proceedings because he believed it was in the best interests of his clients. (JA 937.) The *9 bankruptcy court warned counsel for the Appellants that he acted at his own peril but scheduled a hearing to begin on a Saturday morning, approximately 36 hours later, and directed the interim bankruptcy trustee (who had not yet been appointed) to show cause at that hearing why he or she should not pay benefits immediately to the Appellants. (JA 641-42, 933-34.) At that hearing, the matter was continued at the request of the interim trustee. (JA 956.)

3. On June 11,2001, the District Court held a lengthy hearing during which the District Court heard evidence and argument from the Receiver and the Appellants. (JA 432-558.) At the conclusion of that hearing, the District Court entered the June 11 Order. (JA 559-66.) In the June 11 Order, as in its prior orders, the District Court did not preclude the filing of an involuntary bankruptcy case against Spartan in the future, but the court did require any person desiring to proceed in bankruptcy court to seek prior leave from the District Court. (JA 565-66.) With respect to the Appellants in particular, the District Court found that they had failed to make an adequate showing that they would obtain relief in a bankruptcy case. (JA 562, 564-65.) The District Court also concluded that forum-shopping contributed to the Appellants' actions, in that they "sought relief in what they perceived to be a more favorable environment" than the District Court. (JA 565.) Furthermore, the District Court concluded that the Appellants, with knowledge of the Receivership Order, failed to comply with applicable law *10 because they made no attempt to seek relief from the District Court. (JA 560.) The District Court stated:

According to Mr. Long [the Appellants' counsel], he made demand on the receiver for the payment of the claims of the Petitioning Creditors subsequent to the receiver's sale of certain properties in Augusta, Georgia for $4.2 million. When that failed, the Petitioning Creditors, through counsel, sought to have their interests advanced in bankruptcy court. At no juncture did the Petitioning Creditors seek relief from this court, by way of petitioning this court for a hearing regarding the receiver's decision, an interpretation of the order appointing receiver, for permission to be excused from paragraph 5 of the order appointing receiver, through intervention in this action and assertion of their claims, or any other manner.

(JA 560.)

4. The District Court provided that the Appellants could purge their contempt of court by "withdrawing the involuntary petition in bankruptcy" within five days. (JA 565.) The Appellants filed a pleading in bankruptcy court purporting to withdraw their petition, but the bankruptcy court entered an order declining to consider the issue or to schedule a hearing on it. (JA 965, 994.) To date, the Appellants have made no application to the District Court regarding any of the issues identified by the District Court in the excerpt quoted above. They have not intervened in the receivership case or sought any relief from the District Court. Instead, the Appellants have appealed directly to this Court.

*11 Several items in the Appellants' statement of facts require comment by the Appellees. [FN2] Although the Appellees agreed that certain pleadings and transcripts from the bankruptcy case in the Southern District of Georgia should be included in the joint appendix in this appeal to provide this Court with an understanding of the context and procedural background of this dispute, the testimony introduced in the bankruptcy case was not before the District Court and certainly did not form the basis of any finding of fact by the District Court. [FN3]

FN2. The Court should not conclude that the Appellees agree with the remainder of the Appellants' statement of facts, much of which is simply irrelevant to the issues before this Court.

FN3. One particular example demonstrates the impropriety of reliance on the testimony presented in bankruptcy court. The Appellants assert that "the majority of the assets of Spartan International, Inc. could be found within the Southern District of Georgia." (Appellants' Br. at 6.) The bankruptcy court's conclusion on this point was based on tax assessments of Spartan's property located in Georgia; however, no South Carolina tax

assessments were introduced into evidence. (JA 680, 686.) The court disregarded the only comparative evidence of the value of South Carolina-and Georgia-based assets of Spartan, which demonstrated that the company's principal assets were in South Carolina. (JA 716-19, 782.) The Appellees intend to appeal what they believe to be the clearly erroneous conclusion by the court on this point.

In any event, several "facts" identified by the Appellants are presented in a misleading fashion. First, the Appellants suggest that the Receiver was appointed ex parte. (Appellants' Br. at 4.) In fact, the plaintiff and all defendants in the receivership action were present at the hearing, along with counsel for certain *12 creditors, including at least one creditor who argued that additional notice should have been provided. (JA 324-25, 334.) The District Court concluded that, in the circumstances of this case, it was sufficient that creditors be notified of the Receiver's appointment after the fact. (JA 340-41, 363-64, 373.) Second, the Appellants claim that the Receiver is paid by GE Capital. (Appellants' Br. at 4.) The Receivership Order states clearly that the Receiver's compensation comes from available funds in the receivership estates, and the Receiver so testified before the bankruptcy court. (JA 367, 778.) Third, the Appellants suggest that "the receiver sold equipment and assets valued at $23.7 million in the Augusta King Mill facility for $4.1 million." (Appellants' Br. at 5.) In fact, as the testimony before the District Court made clear, the $23 million figure comes from a tax assessment, which under any standard is not a valid measure of value in a liquidation context; the Receiver reviewed appraisals of the property sold and discussed them with the appraisers; and, in light of his investigation and attempts to negotiate a higher price, the Receiver believed that the sale price was fair. (JA 458, 471-72, 479-86.) The evidence before the District Court showed that the interim bankruptcy trustee would have taken the same steps if he were selling the property. (JA 521-23.)

*13 Fourth, the Appellants argue that the Receivership Order contains "none of the safeguards generally associated with a bankruptcy liquidation," such as provisions for attacking the lien position of GE Capital or notice procedures regarding the sale of property by the Receiver. (Appellants' Br. at 5.) The Appellants do not suggest any reason why they were unable to intervene in the receivership action to seek safeguards that they believed would be appropriate. Certainly the Receivership Order itself contemplates that the District Court is willing to grant further relief to creditors or others who seek relief. (JA 425 ¶ 6, 427 ¶ 13.) With respect to the notice issue, the Receiver testified before the District Court that, given the state of the textile industry, the daily decline in the value of textile-related property, and the delay and expense inherent in providing notice of each asset disposition to all creditors, he believed he could maximize returns to creditors if he were not required to provide notice of asset sales. (JA 355-56.) Finally, the Appellants' assertion that proceedings are continuing in the District Court "to authorize the receiver to continue to sell property" despite the automatic stay is simply inaccurate. (Appellants' Br. at 9.) The Appellees have taken no action inconsistent with this Court's order of July 6 directing the parties to maintain the status quo pending appeal, and the Appellants' citation to the appendix reveals nothing to the contrary.

*14 SUMMARY OF ARGUMENT

The overriding problem in this case is the Appellants' unilateral decision to ignore an injunction issued by a district court in this Circuit. The Appellants' actions are troubling because they are fundamentally inconsistent with the effective operation of a judicial system that relies to a significant degree on voluntary compliance with court decrees. Moreover, the Appellants' actions have created a number of difficulties in this particular case, including a failure of appellate jurisdiction and the lack of a developed record on appeal.

This appeal does not present a case or controversy within this Court's appellate jurisdiction. Because the Appellants have elected not to intervene or to otherwise become parties to this action, they lack standing to appeal. To the extent that the Appellants seek to challenge the District Court's citation of them for contempt, the appeal is moot because they have purged their contempt.

For similar reasons, the Appellants face a significant procedural hurdle on the merits. Because they have not presented any of their appellate arguments to the District Court, this Court must review these issues for plain error. The District Court's actions and orders were appropriate under any standard of review. Nevertheless, any error identified by the Appellants certainly cannot have been plain, because this case presents a question of first impression in this Court. Furthermore, the fairness, integrity, and public reputation of judicial proceedings *15 are threatened not by the orders of the District Court, but by the Appellants' disregard for those orders.

A federal district court has in rem jurisdiction over receivership property and necessarily possesses broad powers to protect that property, and its appointed receiver, from interference by creditors or other courts. The receivership court has the right to determine in the first instance whether and to what extent it will permit creditors to obtain possession of property in the hands of its receiver, and whether it will allow another court to interfere with its jurisdiction over that property. In this context, a receivership court may enjoin non-parties from taking actions inconsistent with its jurisdiction, notwithstanding the otherwise applicable provisions of Federal Rule of Civil Procedure 65(d). The Bankruptcy Code does not alter these general and longstanding principles of federal equity jurisdiction. In short, the District Court had the authority to enjoin creditors from filing an involuntary bankruptcy petition against Spartan without prior leave, and it properly exercised that authority in this case.

*16 ARGUMENT

Standard of Review

Because none of the issues the Appellants have raised on appeal were presented to the District Court, this Court's review is for plain error. See In re Celotex Corp., 124 F.3d 619, 631 (4th Cir. 1997) (adopting plain-error standard of United States v. Olano, 507 U.S. 725 (1993), in civil case where appellant raised arguments for first time on appeal).

Introduction

The Appellants declined to seek relief from or clarification of the Receivership Order before taking action in an attempt to wrest jurisdiction from the District Court. Even after learning that their interpretation of the Receivership Order was erroneous, the Appellants studiously avoided participating in the receivership case by intervening or otherwise becoming parties. The Appellants' efforts to avoid the District Court are not only indicative of their lack of regard for its authority; they also have prevented the development of a complete appellate record and have defeated this Court's jurisdiction.

*17 I. BECAUSE THE APPELLANTS LACK STANDING TO APPEAL, THE APPEAL MUST BE DISMISSED.

The Appellants devote three sentences of their brief to the issue of their standing to pursue this appeal. (Appellants' Br. at 17-18.) The Appellants contend that they have standing because the District Court held them in contempt and enjoined them from further activity in the bankruptcy case. (Id.) The only two cases cited by the Appellants directly contradict their argument, as discussed below. The Appellants' standing argument fails for two simple reasons. First, even nonparties who are subject to injunctions do not have standing to appeal. Second, because the Appellants have purged their contempt by withdrawing the bankruptcy petition, the contempt issue is moot.

A. A Nonparty Lacks Standing To Appeal, Even If the Nonparty Is Subject to a Receivership Injunction.

"The rule that only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment, is well settled." Marino v. Ortiz, 484 U.S. 301, 304 (1988) (affirming dismissal of appeal by nonparty). See also United States ex rel. Louisiana v. Boarman, 244 U.S. 397, 402 (1917) (affirming denial of mandamus sought by nonparty); Bayard v. Lombard, 50 U.S. (9 How.) 530, 551 (1850) (affirming denial of writ of error brought by nonparty); Fed. R. App. P. 3 (c)(1)(A) (requiring notice of appeal to "specify the party or parties taking the appeal").

*18 The leading case on appeals by nonparties in this Circuit is a federal receivership case. In Newberry v. Davison Chemical Co., 65 F.2d 724 (4th Cir.), cert. denied, 290 U.S. 660 (1933), an equity receiver was appointed for the defendant corporations with their consent, and the district court entered an order "enjoining all persons from interfering in any way with property in the hands of the receiver." Id. at 727. Certain creditors with unsatisfied executions made special appearances in the receivership action and moved for the discharge of the receivers and the turnover of the defendants' property to the sheriffs holding the executions. When the receivership court denied their motions, the creditors attempted to appeal. This Court dismissed the appeal because the creditors "were not made parties to either of the suits in the court below, and there was thus no basis for a special appearance to contest the jurisdiction of the court over them. They did not make themselves parties to either of the suits, by intervention or otherwise, but expressly refused to do so." Id. at 729.

The Appellants here are in the same position as the creditors in Newberry attempting to appeal from a federal receivership injunction that blocked their preferred course of action against property of the receivership estate. Neither the creditors in Newberry nor the Appellants here sought to intervene in the receivership case; instead, both "expressly refused to do so." Id. Thus, Newberry controls and disposes of the Appellants' standing arguments.

*19 This Court has enforced the settled rule against nonparty appeals on a number of occasions. For example, in Davis v. Scott, 176 F.3d 805, 808 (4th Cir. 1999), the Court dismissed an appeal by a prisoner in a habeas corpus case because the prisoner's wife, and not the prisoner himself, was the applicant for habeas relief in the district court. [FN4] See also Adkins v. North Carolina Attorney General, No. 00-7286, 2000 WL 1875974, at *1 (4th Cir. Dec. 27, 2000) (concluding that purported appellant in habeas case was nonparty without standing to appeal), cert. denied, 121 S. Ct. 1623 (2001).

FN4. This Court suggested in Davis that a nonparty who has an interest in the case and has participated in the proceedings actively enough to make him privy to the record may appeal without intervening. See Davis, 176 F.3d at 807 (citing Kenny v. Quigg, 820 F.2d 665 (4th Cir. 1987)). The Supreme Court subsequently disapproved the nonparty appeal exception expressed in Kenny, stating that "the better practice is for such a nonparty to seek intervention for purposes of appeal; denials of such motions are, of course, appealable." Marino, 484 U.S. at 304. In any event, the Appellants have not participated actively in the proceedings in this case; rather, their behavior can best be described as a steadfast refusal to participate in the case or to acknowledge the District Court's jurisdiction.

B. The Appellants Mooted Any Appealable Issues By Purging Their Contempt of Court.

The Appellants arguably would have standing to appeal the June 11 Order if they continued to be in contempt of court. See MDK, Inc. v. Mike's Train House, Inc., 27 F.3d 116, 121 (4th Cir.) (recognizing that nonparties may appeal contempt citations related to discovery orders), cert. denied, 513 U.S. 1000 (1994). However, the Appellants purged their contempt by filing a withdrawal of the *20 involuntary bankruptcy petition in the bankruptcy court (JA 965), notwithstanding that the District Court almost certainly did not anticipate that the bankruptcy court would refuse to entertain the issue.

Because their contempt has been purged, the Appellants' appeal of their contempt citation is moot. See, e.g., United States v. Paccione, 964 F.2d 1269, 1274 (2d Cir.) (dismissing appeal of contempt citation as moot), cert. denied, 505 U.S. 1220 (1992); In re Hunt, 754 F.2d 1290, 1293 (5th Cir. 1985) (concluding that appeal was moot because contempt had been purged); In re Cordova Gonzalez, 726 F.2d 16, 21 (1st Cir.) (same), cert. denied, 466 U.S. 951 (1984); In re Campbell, 628 F.2d 1260, 1261 (9th Cir. 1980) (collecting cases from five courts of appeals). [FN5]

FN5. This appeal also is moot to the extent that the Appellants seek to

challenge the TRO, as "technically flawed" or otherwise. (Appellants' Br. at 16.) The TRO expired by its terms on June 11, 2001, on which day the District Court held a hearing and entered a preliminary injunction. (JA 376.) Accordingly, any appeal of the TRO is moot. See Berry v. Bean, 796 F.2d 713, 715 n.1 (4th Cir. 1986) (holding that appeal of TRO is moot where district court subsequently holds preliminary-injunction hearing).

C. The Only Authority Cited by the Appellants Undercuts Their Standing Argument.

The Appellants have cited no cases that even suggest, much less establish, that they have the right to appeal in this case. To the contrary, the only cases cited by the Appellants establish unambiguously that nonparties may not appeal. See *21 United States v. Sherman, 581 F.2d 1358, 1360 (9th Cir. 1978) (holding that enjoined nonparty lacked standing to appeal and only remedy was to seek writ of mandamus); CBS, Inc. v. Young, 522 F.2d 234 (6th Cir. 1975) (same). [FN6]

FN6. The Appellants have not petitioned this Court for a writ of mandamus, nor should their appeal be construed by the Court as a petition for such a writ. As this Court recently observed in In re Glover, 205 F.3d 1333 (4th Cir. 2000), "[a] writ of mandamus is a drastic remedy to be used only

in extraordinary circumstances. Relief under this writ is only available when there are no other means by which the relief sought could be granted, and it may not be used as a substitute for appeal. The party seeking relief carries the heavy burden of showing that he has 'no other adequate means to attain the relief he desires' and that his right to such relief is 'clear and indisputable.' " Id. at 1333 (citations omitted). If the Appellants wished to appeal the Receivership Order, they should have moved to intervene in the receivership action or moved for relief from the judgment under Rule 60(b) of the Federal Rules of Civil Procedure, as they were previously informed by the Clerk of the District Court at the direction of the District Court. (Appellants' Br. at 9.) Even assuming that the Appellants were to petition this Court to issue a writ of mandamus, the petition could not be granted because, for the reasons discussed in this brief, the Appellants could not satisfy their " 'burden of showing that [their] right to issuance of the writ is clear and indisputable.' " United States ex rel. Rahman v. Oncology Associates, P.C., 198 F.3d 502, 510 (4th Cir. 1999) (quoting Kerr v. United States Dist. Court, 426 U.S. 394, 403 (1976)).

In sum, the Appellants have not even seriously argued that they have standing to appeal in this case. Their argument on this point is simply that because they have been aggrieved, they are entitled to appeal. Nonetheless, the rules for appellate standing are clear. The well-settled authority on this issue, as cited by the Appellants themselves, demonstrates that this appeal cannot proceed and must be dismissed.

*22 II. THE DISTRICT COURT HAD THE POWER TO ENTER THE ORDERS THAT ARE THE SUBJECT OF THIS APPEAL AND EXERCISED ITS DISCRETION APPROPRIATELY.

The Appellants make a number of arguments in their brief, many of which are moot or otherwise irrelevant to any substantive issue in this case. Their central arguments, however, focus on two primary questions: (1) was the District Court authorized to issue the Receivership Order, enjoining nonparties from taking actions against the property of the Receiver Estate; and (2) can such an injunction be applied to preclude the Appellants from filing an involuntary bankruptcy petition without prior leave? A review of the relevant authority reveals that the District Court had ample justification and authority to take all of the actions that are the subject of this appeal.

A. Because the Appellants Have Raised No Issues Whatsoever Before the District Court, This Court's Review on Appeal Is for Plain Error.

Although the Appellants appeared before the District Court for a lengthy hearing on June 11, 2001, the Appellants have failed to raise the issues in this appeal-or any other issues-before the District Court. [FN7] As such, this Court *23 should review the actions and decisions of the District Court only for plain error. See Celotex, 124 F.3d at 631 (plain-error standard applies to arguments raised for first time on appeal).

FN7. The Appellants have not filed any pleading or brief with the District Court and have otherwise made no formal legal argument before the District Court that its actions are impermissible or erroneous. At the June 11, 2001 hearing, counsel for the Appellants spent most of his time explaining why he believed that his clients should receive medical benefits from Spartan and why he did not interpret the Receivership Order as enjoining his clients from filing a bankruptcy petition. He did not argue at any point in the hearing, with citation of authority or otherwise, that the District Court was without authority to take the actions that it did. (JA 546-57.) Thus, the Appellants are presenting their arguments for the first time on appeal.

Typically, a district court's orders with respect to its appointment of a receiver or the conduct of a receivership would be reviewed for abuse of discretion. See Lias v. United States, 196 F.2d 90, 92 (4th Cir. 1952) (reviewing appointment of receiver for abuse of discretion); SEC v. Arkansas Loan & Thrift Corp., 427 F.2d 1171, 1172 (8th Cir. 1970) ("Any action by a trial court in supervising an equity receiver is committed to his sound discretion and will not be disturbed unless there is a clear showing of abuse."). Similarly, properly preserved questions of law ordinarily would be subject to de novo review. See, e.g., Williams v. Department of Veterans Affairs, 104 F.3d 670, 673 (4th Cir. 1997) (interpretation of statute); Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531, 538 (4th Cir. 2000) (jury instructions). However, even questions of law are subject to plain-error review if they have not been presented to the district court. For example, in Celotex, this Court concluded that a district court had erred in its determination of an issue of personal jurisdiction. See Celotex, 124 F.3d at 630. Nevertheless, the Court affirmed the decision because the plain-error standard had not been met. See id. at 631-32. See also United States v. Stitt, 250 F.3d 878, 883-888 (4th Cir. 2001) (applying plain-error standard to issue of jury *24 instructions when appellant did not raise issue in district court); United States v. Brewer, No. 98-4833, 1999 WL 713892, at * 1 (4th Cir. Sept. 14, 1999) (holding that issue of constitutional law, which normally would be reviewed de novo, would be reviewed only for plain error where appellant failed to raise issue below).

Under the standard established in Celotex, the Appellants cannot prevail in this appeal unless "(1) there is an error; (2) the error is plain; (3) the error affects substantial rights; and (4) the court determines, after examining the particulars of each case, that the error seriously affects the fairness, integrity or public reputation of judicial proceedings." Celotex, 124 F.3d at 630-31. The Appellants must establish these factors "at a minimum" if they are to succeed in this appeal. Id. at 631.

In sum, because the Appellants have never given the District Court the opportunity to consider any of the arguments they raise now on appeal, this Court must review the District Court's decisions for plain error only. Under any standard of review, however, this Court should uphold the District Court's orders as valid and permissible means of protecting the court's jurisdiction and the integrity of its orders.

*25 B. The District Court Had the Authority To Issue the Receivership Order and To Enforce Its Injunction Against the Appellants.

Throughout their brief, the Appellants contend incorrectly that the injunctive language in the District Court's Receivership Order cannot be effective against nonparties. (Appellant's Br. at 11-13.) As with the standing issue, the Appellants have ignored completely the authority that the Appellees have cited already on this point. (See Response and Objection of Appellee General Electric Capital Corporation to Appellants' Emergency Motion at 12-13.) This omission suggests what is in fact the case-that the Appellants' position is without merit.

1. Federal Receivership Courts Have Broad Injunctive Powers, Including the Power To Prevent Nonparties From Interfering With the Receivership.

The Appellants have not challenged the broad discretion enjoyed by a district court in deciding whether to appoint a receiver. See Lias, 196 F.2d at 92 (holding that district court did not abuse discretion in appointing receiver); 13 Moore's Federal Practice § 66.04[1][b] (3d ed. 1997) (discussing court's discretion). A district court has the inherent equitable power to appoint a receiver in cases of insolvency, fraud, or mismanagement. See SEC v. Bowler, 427 F.2d 190, 197-98 (4th Cir. 1970) (reversing denial of motion for appointment of *26 receiver). There is no argument in this case that the District Court abused its discretion in appointing the Receiver. [FN8]

FN8. The Appellants do suggest in their statement of facts that the Receivership Order was procedurally improper because all creditors were not notified of the hearing. (Appellants' Br. at 4, 12.) As noted above, the District Court rejected this proposition. A receivership court is not required to hold a hearing at all on a motion for appointment of a receiver, much less provide burdensome notice to all creditors. See RTC v. Fountain Circle Associates L.P., 799 F. Supp. 48, 49 (N.D. Ohio 1992) (holding that hearing is not required); cf. FDIC v. American Bank Trust Shares, Inc., 629 F.2d 951, 954 (4th Cir. 1980) (rejecting claim that shareholders were entitled to notice of receivership hearing). The Appellants' characterization of the facts also implies that the

Receivership Order caused the Receiver to become the agent of GE Capital. (Appellants' Br. at 4-5.) However, the law is clear that a receiver, even one suggested by a party, is "the agent only of the court appointing him." Ledbetter v. Farmers Bank & Trust Co., 142 F.2d 147, 150 (4th Cir.) (rejecting argument that creditor was liable for negligence of receiver), cert. denied, 323 U.S. 719 (1944).

Once a district court appoints a receiver, the district court obtains "exclusive jurisdiction over the assets and administration" of the receivership estate. Eller Industries, Inc. v. Indian Motorcycle Mfg., Inc., 929 F. Supp. 369, 371 (D. Colo. 1995); 13 Moore's § 66.06[1][c]. Accordingly, "the courts of the United States are clothed with ample power, by injunction, to prevent judgment creditors from harassing a receiver or interfering with the property in his possession." Willcox v. Jones, 177 F. 870, 875 (4th Cir. 1910). Thus, the District Court had the power to enjoin nonparties, and it followed a long line of precedent when it enjoined the prosecution of claims against a company in receivership. See, e.g., *27Schwartz v. Randolph, 72 F.2d 892, 894 (4th Cir. 1934) (discussing effect of stay issued by district court); SEC v. Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980) (holding that receivership court has power to issue blanket stay effective against nonparties where necessary to achieve purposes of receivership); Eller Industries, 929 F. Supp. at 373 (enjoining all equitable actions against defendant); United States v. ESIC Capital, Inc., 675 F. Supp. 1462, 1464 (D. Md. 1987) (denying motion for relief from stay of actions against defendant).

2. Rule 65(d) Does Not Restrict a Receivership Court's Injunctive Powers.

Faced with this substantial authority upholding the broad powers of federal receivership courts, the Appellants seek refuge under Federal Rule of Civil Procedure 65(d), which sets forth the general rule that injunctions may be enforced only against parties to the underlying action and certain other related parties. (Appellants' Br. at 13-14.) None of the cases cited by the Appellants on this issue involves a federal receivership court, and factually apposite authority demonstrates that Rule 65(d) is inapplicable in this case.

As an initial matter, the Rules of Civil Procedure themselves significantly undercut the Appellants' argument. Receivers are addressed specifically in Rule 66, which reads in relevant part as follows:

*28 The practice in the administration of estates by receivers or by other similar officers appointed by the court shall be in accordance with the practice heretofore followed in the courts of the United States or as provided in rules promulgated in the district courts. In all other respects the action in which the appointment of a receiver is sought or which is brought by or against a receiver is governed by these rules.

Fed. R. Civ. P. 66 (emphasis added). Thus, to the extent that Rule 65(d) conflicts with the practice in receivership cases-which it does, for the reasons explained in this brief-it does not control in this case.

Indeed, courts considering Rule 65(d) in the context of a federal receivership court's broad equitable powers have concluded, without exception, that Rule 65(d) does not constrain the court's power to issue broad injunctions to prevent interference with the court's jurisdiction or the property of the receivership estate. See FTC v. Productive Marketing, Inc., 136 F. Supp. 2d 1096, 1104-06 (C.D. Cal. 2001) (holding that inherent authority of federal receivership court is broader than Rule 65(d)); SEC v. Universal Financial, 760 F.2d 1034, 1038 (9th Cir. 1985) (same); SEC v. Wencke, 622 F.2d at 1369 (same); cf. United States v. Hall, 472 F.2d 261, 265-67 (5th Cir. 1972) (concluding that Rule 65 does not prevent district court from enjoining nonparties from interfering with property under court's jurisdiction).

*29 Likewise, the courts have concluded that judicial power under the All Writs Act, 28 U.S.C. § 1651, which the District Court expressly invoked in this case (JA 562), is not constrained by Rule 65(d). See United States v. New York Tel. Co., 434 U.S. 159, 174 (1977) (holding that All Writs Act authorizes injunctions against nonparties); In re Baldwin-United Corp., 770 F.2d 328, 339 (2d Cir. 1985) (holding that injunctions issued pursuant to the All Writs Act are not subject to the requirements imposed by Rule 65).

The courts considering this issue recognize that a federal receivership court, or any other court with exclusive jurisdiction over particular property, could not control the property in its charge if nonparties were permitted, over the court's order, to disregard the receivership and proceed against the property in another forum. See Hall, 472 F.2d at 266 (discussing difficulty courts would have if powerless to prevent interference with property by nonparties). It is this characteristic of a federal receivership court--the fact that it holds, and is entitled to retain, exclusive jurisdiction over the receivership estate's property--that necessitates such broad powers. See Productive Marketing, 136 F. Supp. 2d at 1104-05 (explaining necessity for receivership court's broad injunctive powers).

*30 For these reasons, the Appellants' reliance on Rule 65(d) is misplaced. [FN9] The general equitable powers of a federal receivership court, together with the All Writs Act, provide ample authority for the Court to issue an injunction against a nonparty.

FN9. The Appellants also argue, almost in passing, that the Receivership Order's injunction fails for lack of specificity under Rule 65(d) because it "does not specifically prohibit the filing of an involuntary bankruptcy case." (Appellants' Br. at 13.) Notwithstanding that, as noted

above, the District Court's injunction was not subject to the requirements of Rule 65(d), the Appellants' argument confuses breadth with lack of specificity. The injunction contained in the Receivership Order is in fact quite specific. It enjoins "all persons" from "in any way prosecuting or commencing any action, suit or proceeding that affects the Receiver Estates or the Defendants." (JA 369, emphasis added.) The Appellants do not seriously contend that their involuntary bankruptcy petition and emergency motion did not affect the receivership estates. In any event, even if such an error in form existed, the remedy would be to remand the matter with instructions to make the necessary corrections to the order. See Seattle-First Nat'l Bank v. Manges, 900 F.2d 795, 800 (5th Cir. 1990) (maintaining injunction and remanding with corrective instructions); In re Energy Cooperative, Inc., 886 F.2d 921, 930 (7th Cir. 1989) (same).

C. The District Court Was Authorized To Preclude the Filing of an Involuntary Bankruptcy Petition Without Leave of Court.

The Appellants argue repeatedly that the District Court was not authorized to enjoin them from filing an involuntary bankruptcy petition. (Appellants' Br. at 11-16.) However, apart from stating that they know of no case upholding such an injunction (id. at 12), the Appellants offer no authority in support of their argument.

*31 Contrary to the Appellants' suggestion, courts have in fact issued injunctions against the filing of involuntary bankruptcy petitions, as the cases cited below make clear. Furthermore, in light of the weight of authority supporting the powers of federal receivership courts and the authority recognized by the All Writs Act, the District Court was amply justified in enjoining the Appellants' involuntary petition against Spartan. For these reasons, this Court should reject the Appellants' unsupported attack on the District Court's orders.

1. A Receivership Court Has the Power To Protect Its Exclusive Jurisdiction Against Interference, Including Attempts To Invoke the Jurisdiction of Another Court.

Section II.B. above sets forth the basis and the breadth of a federal district court's authority and ability to protect its jurisdiction and the property under its control by enjoining attempts to interfere with that jurisdiction and property. This same authority supplied the District Court with the power necessary to enjoin the Appellants from filing their involuntary bankruptcy petition in this case.

Upon imposition of a receivership, all property in the possession of the debtor passes into the custody of the receivership court, and becomes subject to its authority and control. In the exercise of its jurisdiction over the debtor's property, the court has power to issue injunctions and all other writs necessary to protect the estate from interference and to ensure its orderly administration.

Eller Industries, 929 F. Supp. at 372. Thus, a federal receivership court "is entitled in the first instance to pass upon the question whether the receiver shall part with any portion" of the property in the hands of the receiver. *32Buckhannon & N. R.R. Co. v. Davis, 135 F. 707, 711 (4th Cir. 1905). See also Penn General Casualty Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 197 (1935) (concluding that upon assuming in rem jurisdiction, federal receivership court "alone can rightfully assert control over the property and proceed with litigation which affects that control ... and it alone can determine how far it will permit any other court to interfere"); City of Orangeburg v. Southern Ry. Co., 134 F.2d 890, 892 (4th Cir. 1943) (affirming injunction precluding parties from interfering with in rem jurisdiction by proceeding in another court); Wannamaker v. Eaves, 79 F.2d 553, 557 (4th Cir. 1935) (holding that district court was "unquestionably right in granting an interlocutory injunction" restraining proceedings that would interfere with court's in rem jurisdiction).

Although they were aware of and had a copy of the District Court's injunction, the Appellants did not permit the District Court to consider in the first instance whether and how their claims against Spartan should be paid. Rather, they exercised the equivalent of a self-help remedy, seeking out what they believed to be a more favorable forum and filing the petition and their emergency motion in the face of the injunction. The Appellants' actions were a flagrant attempt to deprive the District Court of its in rem jurisdiction over the receivership property, usurping for themselves the District Court's authority to determine whether the Appellants' course of action should be permitted.

*33 At bottom, the Appellants' argument is that because Congress has enabled creditors to file involuntary bankruptcy petitions, a district court cannot enjoin that action. [FN10] (Appellants' Brief at 15-16.) This argument creates a number of difficulties, especially because Congress has spoken to the power of receivers as well, providing that a receiver of property in different districts "shall, upon giving bond as required by the court, be vested with complete jurisdiction and control of all such property with the right to take possession thereof." 28 U.S.C. § 754. It is undisputed that the Receiver in this case complied with the requirements of Section 754. Congress also has provided that actions against a receiver are "subject to the general equity power" of the court appointing the receiver. 28 U.S.C. § 959(a). And Congress is indirectly responsible under the Rules Enabling Act, 28 U.S.C. § 2072, for Rule 66, discussed above, which provides that "the practice heretofore followed in the courts of the United States" governs receivership cases. Fed. R. Civ. P. 66.

FN10. The Appellants' argument that the "receivership action is an overt attempt by the secured creditor to circumvent the rights granted by Congress" is simply inaccurate. (Appellants' Br. at 16.) As a single creditor, GE Capital could not have commenced an involuntary bankruptcy case. See 11 U.S.C. § 303(b)(1). Accordingly, it availed itself of several rights with long historical pedigrees at common law and in courts of equity, including rights granted by Congress, particularly the right to commence a diversity case in federal court and the right to seek the appointment of a receiver in the discretion of a district court.

*34 But the Appellants' argument that a federal right cannot be enjoined proves far too much as well. [FN11] For example, Congress has provided a means by which litigants may collect on supersedeas bonds, expressed in Federal Rule of Civil Procedure 65.1. The existence of this right does not mean that a federal court is without authority to restrain its exercise, nor does it mean that affected persons may simply ignore an injunction because they believe it to be wrong. The Supreme Court addressed this precise issue in Celotex Corp. v. Edwards, 514 U.S. 300 (1995), and rejected a litigant's attempt to avoid an injunction by arguing that it was invalid. See id. at 313. Congress also enacted the Freedom of Information Act, giving citizens a right to review certain agency records. Yet that right is subject to the interposition of an injunction that may frustrate the right. See GTE Sylvania, Inc. v. Consumers Union, 445 U.S. 375, 386 (1980) (holding that agency was not required to release documents where prohibited by injunction). Even where a constitutional right, such as the right of free speech, is at stake, an affected person must either follow an injunction, despite a belief that it is invalid, or seek relief from the issuing court. See Walker v. City of Birmingham, 388 U.S. 307, 320-21 (1967) (affirming criminal contempt convictions despite substantial *35 constitutional questions about injunction and underlying ordinance where petitioners defied injunction rather than seek relief from it); cf. Mays v. Harris, 523 F.2d 1258, 1259 (4th Cir. 1975) (denying habeas relief to prisoner convicted for driving in violation of injunction, even though injunction was invalid).

FN11. Though they do not say so specifically, the Appellants seem to suggest that the ability to file a bankruptcy petition is a fundamental constitutional right. (Appellants' Br. at 15-16.) Their suggestion is incorrect. See United States v. Kras, 409 U.S. 434, 450 (1973) (holding that there is no fundamental right to file a bankruptcy petition).

In sum, nothing about Congress' enactment of the Bankruptcy Code implicitly limited the power of a federal receivership court to issue appropriate orders to protect and preserve its jurisdiction against interference by creditors. Indeed, as the Supreme Court has recognized, if Congress intends to limit the inherent powers of the federal courts, it must do so directly. See New York Tel. Co., 434 U.S. at 172-73 (citing Adams v. United States ex rel. McCann, 317 U.S. 269, 273 (1942)).

2. Contrary to the Appellants' Suggestion, Other Courts Have Issued and Upheld Injunctions Against Involuntary Bankruptcy Petitions.

The only authority cited by the Appellants on the issue of whether a receivership court may enjoin an involuntary bankruptcy case is this Court's express refusal to decide the issue in United States v. Vanguard Investment Co., 907 F.2d 439, 440 n.** (4th Cir. 1990) (per curiam). Other courts have taken an additional step, however, and have reached the issue.

*36 In United States ex rel. SEC v. Carter, 907 F.2d 484 (5th Cir. 1990), the district court entered a receivership order that, among other things, "enjoined 'all persons ... from in any way disturbing the possessions of the Receiver and from prosecuting any actions which involve the Receiver or which affect the property of [the defendant corporations] except in this Court.' " Id. at 485. A former employee of one of the companies in receivership organized several creditors and, with knowledge of the injunction, filed involuntary bankruptcy petitions against the companies. See id. The receivership court determined that the petitions were void, proceeded with the receivership, and found the petitioners in civil and criminal contempt of court. See id. The Fifth Circuit reversed the criminal-contempt convictions on procedural grounds but did not disturb any other action of the receivership court. See id. at 488.

The district court in In re First Commodity Corp, of Boston Customer Accounts Litigation, 89 B.R. 283 (D. Mass. 1988), was presiding over multidistrict class actions against a commodities firm. See id. at 284. In connection with a proposed settlement, the defendant placed settlement funds in escrow and sought an order under the All Writs Act staying all litigation against it. See id. at 285-86. The court stayed certain actions and declined to stay others. See id. at 288-90. Importantly, however, the court specifically ordered that prior approval of the court would be required before any person could seek to attach the escrowed settlement *37 funds or file an involuntary bankruptcy petition against the defendant. See id. at 291-92. This step was necessary, the court found, "to aid this court's jurisdiction, to effectuate existing orders, to protect this court's authority to decide whether the settlement should be finally approved, and to protect the res established to fund the settlement." Id. at 292. The court expressed its willingness to entertain a request for leave to file an involuntary bankruptcy petition but indicated that it wished to determine "before potentially fatal injury is inflicted" whether the petitioners were acting vexatiously. Id.

In SEC v. Lincoln Thrift Association, 577 F.2d 600 (9th Cir. 1978), the Ninth Circuit considered a receivership action in which a group of 800 creditors filed a motion to transfer the case to bankruptcy court. See id. at 605. (By merely filing such a motion, of course, these creditors took a more active role in the receivership than the Appellants have in this case.) Despite the creditors' arguments that their interests would be better served in bankruptcy and that they were not receiving notice of the receiver's sales of estate property, the Court of Appeals acknowledged the wide discretion afforded to a federal receivership court and affirmed the denial of the motion to transfer. See id. at 609.

Finally, the district court opinion in Vanguard, affirmed by this Court, contains thoughtful analysis that is applicable equally to voluntary and involuntary *38 bankruptcy filings. The district court in that case noted that "the debtor offered no reasons justifying filing the petition but merely asserted an unqualified right to do so." United States v. Vanguard Investment Co., 667 F. Supp. 257, 260-61 (M.D.N.C. 1987), aff'd, 907 F.2d 439 (4th Cir. 1990). The Appellants' position in this case is much the same. (Appellants' Br. at 15-16.) Vanguard also argued that its primary creditor was "concerned only with getting its money out" and not with other creditors, 667 F. Supp. at 261, as the Appellants have argued here. (Appellants' Br. at 16.) The Vanguard court pointed out in response "that the receiver will be under court supervision, and therefore, that all [creditors'] rights will be adequately protected." Vanguard, 667 F. Supp. at 261. Finally, that court remarked that "the timing of the filing of the petition is consistent with a motive to undermine this Court's jurisdiction," a motive that is evident from the Appellants' actions and pleadings in the instant case. Id. at 261.

Thus, the Appellants' suggestion that the District Court broke new ground in this case by enjoining the filing of an involuntary bankruptcy without leave of court is inaccurate. Although the issue has not been litigated frequently, several courts have taken the same or similar course as the District Court took in this case.

*39 3. The District Court Should Be Permitted To Exercise Its Discretion as to Whether an Involuntary Bankruptcy Case Should Proceed.

The District Court has not determined that it will never allow an involuntary bankruptcy case to proceed against Spartan. Rather, at this stage the court has simply determined that the Appellants have made no showing that a bankruptcy case will be beneficial to them or other creditors. (JA 564-65.) The record before the District Court supports that determination.

It is undisputed that the Appellants' sole aim is to seek immediate payment of their alleged WARN Act claims. (Appellants' Br. at 5; JA 578, 655.) The case law and the Bankruptcy Code are clear that WARN Act claims do not receive first-priority payment status. See In re Kitty Hawk, Inc., 255 B.R. 428, 438-39 (Bankr. N.D. Tex. 2000) (holding that WARN Act claimants terminated pre-bankruptcy are not entitled to administrative priority under 11 U.S.C. § 507(a)(1) but receive Section 507(a)(3) priority); In re Jamesway Corp., 235 B.R. 329, 348 (Bankr. S.D.N.Y. 1999) (holding that claimants terminated pre-bankruptcy are not entitled to administrative priority in bankruptcy). No court has ever authorized pre-bankruptcy WARN Act benefits to be paid immediately, as the Appellants have requested, and the Second Circuit has squarely rejected the approach the Appellants took before the bankruptcy court. See Local 217 v. MHM, Inc., 976 F.2d 805, 808-09 (2d Cir. 1992) (holding that employee may not obtain injunctive *40 relief under WARN Act requiring employer to continue medical insurance coverage during the 60 days following termination).

In light of this authority, it is not surprising that the interim trustee was unable to identify any occasion on which WARN Act claims had been paid ahead of a secured creditor's claim. (JA 524-25.) Nor was the Appellants' counsel able to cite any WARN Act authority to the District Court. (JA 548-51.) Thus, the District Court was more than justified in determining that the Appellants failed to demonstrate that a bankruptcy case would benefit their cause.

Of course, the Appellants or some other creditor may persuade the District Court in the future that a bankruptcy case would be more beneficial to creditors than the pending receivership case. Indeed, had the Appellants sought leave to pursue a bankruptcy case prior to taking this appeal, the District Court might have granted them relief. At such a time, however, the District Court might choose, for instance, to order that any such bankruptcy filing be made in the District of South Carolina, thus allowing the District Court to conduct or oversee the bankruptcy case. See Hunt v. Bankers Trust Co., 799 F.2d 1060, 1068 (5th Cir. 1986) (affirming order enjoining creditors from filing involuntary petition in any district other than Northern District of Texas). In any event, the District Court is entitled to consider these matters in the first instance; it should not be subject to jurisdictional ambush by creditors proceeding in another forum.

*41 In sum, this Court should uphold the orders of the District Court. Faced with the injunction in the Receivership Order, the Appellants should have applied to the District Court for clarification or permission regarding their proposed involuntary bankruptcy petition. Instead, they appeared before the District Court only after the fact, made no argument that the District Court's injunction was invalid, and made no showing that a bankruptcy case would better serve the interests of creditors. In these circumstances, this Court's conclusion should be simple: the District Court's orders should be affirmed. [FN12]

FN12. Even if the Court concludes that the District Court erred in some respect, however, reversal is not appropriate under the plain-error standard. Given that this question is one of first impression in this Circuit, any error cannot have been "plain." See United States v. David, 83 F.3d 638, 643 (4th Cir. 1996) (recognizing that where the law is unclear, presentation of objections to district court is most important); United States v. Turman, 122 F.3d 1167, 1171 (9th Cir. 1997) (concluding that error was not plain where no court of appeals had addressed issue at time of trial); United States v. Blackwell, 694 F.2d 1325, 1342 (D.C. Cir. 1982) ("[T]he lack of prior precedent in the circuit and the novelty of the issue presented militate against calling the judge's mistake plain error.") Moreover, any error by the District Court does not "seriously affect[] the fairness, integrity or public reputation of judicial proceedings." Celotex, 124 F.3d at 631. As in Celotex, the Appellants' counsel are experienced trial lawyers, and they do not claim that they "in any way lacked the opportunity to raise the issue" before the District Court. Id. The only risk to the integrity or public reputation of judicial proceedings arising from this appeal relates to the Appellants' disregard of the District Court's order, an action that should not be encouraged in other litigants nor rewarded by this Court on appeal.

*42 III. THE MISCELLANEOUS OTHER ISSUES RAISED BY THE APPELLANTS ARE EITHER IRRELEVANT OR UNAVAILING.

In addition to the salient issues discussed above, the Appellants raise several ancillary issues that have no bearing on this Court's decision. The Appellees address these issues briefly below.

A. The Automatic Stay Does Not Affect the District Court's Power To Enforce Its Injunction.

The Appellants argue that "if the Receivership Order does not enjoin the filing of the involuntary petition, then the Automatic Stay imposed by 11 U.S.C. § 362 prevents further activity in the Receivership case." (Appellants' Br. at 14.) This argument is irrelevant because, as discussed above, the Receivership Order did in fact enjoin the Appellants from filing an involuntary petition. The District Court did not violate the automatic stay by issuing an order confirming this fact after the Appellants' unauthorized filing.

Furthermore, as the District Court itself noted (JA 561-62), a district court with litigation pending before it is entitled to determine whether the automatic stay applies to that litigation. See In re Baldwin-United Corp. Litigation, 765 F.2d 343, 347 (2d Cir. 1985); Brock v. Morysville Body Works, Inc., 829 F.2d 383, 387 (3d Cir. 1987); In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litigation, 140 B.R. 969, 973 (N.D. Ill. 1992) (Easterbrook, J.). Accordingly, the Appellants' automatic-stay issue has no bearing on this appeal.

*43 B. The Appellants' Contempt Citation Was Obviously for Civil Contempt, But Is Subject to Clarification If Necessary.

As noted above, issues related to the Appellants' contempt citation are moot because the contempt has been purged. The Appellants' claim that the contempt citation is invalid because the District Court did not specify whether it was for civil or criminal contempt is also without merit. (Appellants' Br. at 16.) The contempt citation expressly provided a means by which it could be purged. (JA 565.) Because civil contempt is subject to being purged and criminal contempt is not, it is obvious that the District Court cited the Appellants for civil contempt. See Carbon Fuel Co. v. United Mine Workers, 517 F.2d 1348, 1349 (4th Cir. 1975).

Nevertheless, even if the District Court had erred as alleged by the Appellants, such an error is not fatal, and the contempt order may be modified. See Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1482 (9th Cir.) (holding that error in structure of civil-contempt sanction did not require contempt order to be vacated; appellate court could modify it), cert. denied, 506 U.S. 903 (1992); In re Marc Rich & Co. A.G., 739 F.2d 834, 837 (2d Cir. 1984) (holding that district court could correct contempt order to reflect court's original intent).

*44 CONCLUSION

For the foregoing reasons, this appeal should be dismissed for lack of a justiciable case or controversy. Alternatively, the orders of the District Court should be affirmed, and the case should be remanded for further proceedings in the receivership case.

Appendix not available.