Memorandum of Decision Re: Stay Pending Appeal

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re BEYOND WORDS CORPORATION,                                                         No. 92-11176      Debtor. ___________________________/
ORDER DENYING STAY PENDING APPEAL
     As the court stated at the hearing on this matter, it considers meritless the position of creditor Spinnaker Corporation that the court must require the trustee to file a bond before he can pursue litigation against it. There are three reasons for the court's conclusion.      First, FRBP 6009 expressly permits the trustee to prosecute any action in any court, without need of an order from this court. Second, requiring a bond of a trustee or debtor in possession, where no such bond is required of nonbankruptcy litigants would be illegal discrimination against a bankruptcy estate. It would also be irrational, since nonbankruptcy litigants may be far more insolvent than bankruptcy estates.      Third, and most importantly, the bond insisted upon by Spinnaker would constitute an illegal priority for its claim. Litigation costs are general unsecured claims when based on a prepetition act or contract, even if the actual litigation occurred postpetition. In re Hemingway Transport, Inc., 954 F.2d 1, 5 (1st Cir.1992). A bond would have the effect of paying one unsecured creditor ahead of others of equal priority.      IT IS THEREFORE ORDERED that the motion for a stay pending appeal is denied.
Dated: September 1, 1994                                                                                                  _______________________                                                                                                                                                    Alan Jaroslovsky                                                                                                                                                    U.S. Bankruptcy