Background
The Securities and Exchange Commission filed a complaint against Timothy Barton alleging violations of the Exchange Act and Securities Act involving over one hundred investors. Prior to the SEC complaint, ten entities controlled by Barton filed Chapter eleven bankruptcy petitions. A district court appointed a receiver who stayed the bankruptcy proceedings. Later, the receiver and the U.S. Trustee agreed to dismiss the bankruptcy cases, and the district court lifted the stay to allow the bankruptcy court to dismiss the cases. Barton appealed the order lifting the stay.
The court’s reasoning
The court began by analyzing its appellate jurisdiction. It rejected Barton’s argument that the order was appealable under Section twelve hundred ninety-two subsection a one, which covers injunctions, because the order was part of a receivership proceeding. The court explained that Congress intended Section twelve hundred ninety-two subsection a two to govern appeals from receivership orders, distinguishing them from injunction orders. The court also found no jurisdiction under Section twelve hundred ninety-two subsection a two because the order was administrative and did not involve appointing a receiver or refusing to take steps to wind up the receivership. The court further held that the collateral order doctrine did not apply to this type of interlocutory appeal. The court noted that Barton has filed numerous appeals in this litigation and had previously been warned that further frivolous appeals would incur sanctions.
What it means going forward
The dismissal prevents further appellate review of the district court’s order to lift the stay, allowing the bankruptcy cases to proceed toward dismissal. The show cause order puts Barton on notice that he may face financial sanctions if he fails to demonstrate that his appeal was not frivolous.