IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
BEYOND WORDS CORPORATION, No. 92-11176
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,
, 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 _______________________