T-Shack Inc.

#2027, Las Vegas, Nevada 89122 ("Cabana Property"); 1417 Hialeah Drive, Unit B, Las Vegas, Nevada 89119 ("Hialeah Property"); 874 Ripple Way, Las Vegas, Nevada 89110 ("Ripple Property"); 8679 Tom Noon Avenue, #201, Las Vegas, Nevada 89178; 5155 W. Tropicana Avenue, Unit 2010, Las Vegas, Nevada 89103 ("Tropicana 2010 Property"); 5155 W. Tropicana Avenue, Unit 2042, Las Vegas, Nevada 89103; 5155 W. Tropicana Avenue, Unit 2050, Las Vegas, Nevada 89103 ("Tropicana 2050 Property," and collectively with the Tropicana 2010 Property, the "Tropicana Properties"); and 5388 Swenson Street, Las Vegas, Nevada 89119. On January 23, 2025, that proceeding was dismissed when the court granted a contested motion brought by the Office of the United States Trustee. In that First Bankruptcy, T-Shack neither proposed nor confirmed a Chapter 11 plan of reorganization.

On March 5, 2025, T-Shack filed another voluntary Chapter 11 proceeding ("Second Bankruptcy").

On March 19, 2025, T-Shack filed its schedules of assets and liabilities ("Schedules") along with its statement of financial affairs. (ECF No. 21). In its property Schedule "A/B," T- Shack listed five of the eight parcels of real property previously scheduled in the First Bankruptcy: the Cabana Property, the Hialeah Property, the Ripple Property, and the Tropicana Properties.

On April 30, 2025, Shellpoint filed a motion for relief from stay with respect to the Hialeah, Ripple, and Tropicana 2010 Property. (ECF No. 42).

On June 17, 2025, the Office of the United States Trustee ("UST") filed a motion to dismiss the Chapter 11 reorganization proceeding or to convert it to a Chapter 7 liquidation ("Conversion Motion"). (ECF Nos. 86 and 87). The motion was noticed to be heard on July 30, 2025. (ECF No. 88). Creditor Shellpoint joined in the motion. (ECF No. 93). On July 16, 2025, T-Shack filed opposition. (ECF No. 94).

On July 30, 2025, the Conversion Motion as well as various continued matters were heard, including the Shellpoint motion for relief from stay. The Conversion Motion was granted, and the other matters raised during the Chapter 11 proceeding were denied without prejudice in light of the conversion to Chapter 7.

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On August 6, 2025, an order was entered granting the Conversion Motion ("Conversion Order"). (ECF No. 114). Trustee Shapiro was appointed to administer the case. A Notice of Chapter 7 Bankruptcy Case was entered and served on all creditors and parties in interest. (ECF No. 116). The Conversion Order was never appealed, nor was a stay of the Conversion Order ever sought or obtained.

On September 2, 2025, Shellpoint filed a renewed motion under Sections 362(d)(1, 2, and

4) seeking to annul the automatic stay and granting in rem relief as to three specific properties ("Renewed Motion").²(ECF No. 128). The Renewed Motion also requested that relief from stay be granted in rem and that sanctions be entered against T-Shack and its counsel. The Renewed Motion was noticed to be heard on October 22, 2025. (ECF No. 131). On October 8, 2025, T-Shack filed an opposition to the Renewed Motion, to which was attached seven exhibits ("Renewed Opposition"). (ECF No. 145). On the same date, T-Shack filed supporting declarations of its counsel, Michael Harker, and its principal, Ray Zajac.³(ECF No. 146).

On October 15, 2025, Shellpoint filed a reply in support of the Renewed Motion ("Reply"). (ECF No. 147). In that reply, Shellpoint specifically objected to T-Shack's standing to oppose the Renewed Motion inasmuch as the proceeding was converted to Chapter 7. See Reply at 4:8 to 5:22.

On October 22, 2025, the Renewed Motion was called and heard by the court. Trustee Shapiro did not file an opposition or any response to the Renewed Motion, nor did he appear at the hearing. Counsel appeared for Shellpoint as well as for T-Shack. T-Shack's counsel represented that Trustee Shapiro did not oppose T-Shack's attempt to respond to the Renewed Motion, but no evidence to support that representation was offered, nor did such evidence appear

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in the record. At the time the Renewed Motion was presented, the Conversion Order had not been appealed or stayed. Moreover, T-Shack was no longer a debtor in possession, no reorganization of T-Shack was requested, no reorganization of T-Shack was in prospect, Trustee Shapiro held the legal rights and interests of the bankruptcy estate, and Trustee Shapiro had not presented any objection, response, or opposition to the Renewed Motion. After having reviewed and considered the Renewed Motion, the court granted the relief requested under Sections 362(d)(1), 362(d)(2), and 362(d)(4), including Shellpoint's request to annul the automatic stay. On November 24, 2025, an order was entered granting the Renewed Motion, including annulment of the automatic stay, but deferred consideration of Shellpoint's request for sanctions ("Annulment Order"). (ECF No. 154).

On December 2, 2025, T-Shack filed a notice of appeal from the Annulment Order. (ECF No. 157). On the same date, T-Shack filed the instant Stay Motion accompanied by the declaration of its principal ("Zajac Declaration").⁴(ECF Nos. 158 and 159). On December 16, 2025, an order was entered shortening time so that the Stay Motion could be heard on December 24, 2025, at 2:30 p.m. (ECF No. 173 and 174).⁵

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On December 19, 2025, Trustee Shapiro filed his response to the instant Stay Motion. (ECF No. 175).⁶

On December 22, 2025, Shellpoint filed its opposition ("Shellpoint Opposition") to the Stay Motion, to which are attached Exhibits "A" through "H." (ECF No. 176).⁷

DISCUSSION

T-Shack seeks a stay of the Annulment Order pending its appeal but does not specify an applicable statutory basis or applicable rule providing such relief. See Stay Motion, passim. The request appears to be brought under Bankruptcy Rule 8007(a). See FED.R.BANKR.P. 8007(a)(1)(A) ("Ordinarily, a party must move first in the bankruptcy court for the following relief: (A) a stay of the bankruptcy court's judgment, order, or decree pending appeal…."). The Ninth Circuit Court of Appeals has described the traditional standard for a stay pending appeal as follows:

We decide whether to issue a stay by considering four factors, reiterated by the Supreme Court in Nken v. Holder, 556 U.S. 418, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009): (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.⁸Id. at 434 (quoting Hilton v. Braunskill), 481 U.S. 770, 776, 107 S.Ct. 2113, 95 L.Ed.2d 724 (1987)). The first two factors

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"are the most critical," and we only reach the last two "[o]nce an applicant satisfies the first two factors." Id. at 434-35, 129 S.Ct. 1749.⁹ The requirement that an applicant for a stay make a "strong showing" may be explained at least in part by the fact that "[a] stay is not a matter of right, even if irreparable injury might otherwise result." Id. at 433, 129 S.Ct. 1749 (quoting Virginian Ry. Co. v. United States, 272 U.S. 658, 672, 47 S.Ct. 222,

71 L.Ed. 463 (1926)). Indeed "[a] stay is an intrusion into the ordinary processes of administration and judicial review." Id. at 427, 129 S.Ct. 1749 (quotation marks omitted). Issuing a stay is therefore "an exercise of judicial discretion" not to be issued "reflexively," but rather based on the circumstances of the particular case. Id. at 427, 433, 129 S.Ct. 1749. "The party requesting a stay bears the burden of showing that the circumstances justify an exercise of that discretion." Id. at 433-34, 129 S.Ct. 1749. Sierra Club v. Trump, 929 F.3d 670, 687-88 (9th Cir. 2019). See Rojas-Espinosa v. Bondi, 160 F.4th 991, 996 (9th Cir. 2025).

In this instance, T-Shack appeals from the Annulment Order which granted relief from stay under Section 362(d)(1), 362(d)(2), and 362(d)(4).¹⁰The form of relief included annulment of the automatic stay as specifically authorized under Section 362(d). See 11 U.S.C. §362(d) ("On request of a party in interest and after notice and a hearing, the court shall grant relief from stay…, such as by terminating, annulling, modifying, or conditioning such stay…."). A review of the Stay Motion, however, reveals that the merits of the Renewed Motion that resulted in the

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Annulment Order are simply ignored.¹¹ In its Renewed Motion that resulted in the Annulment Order, Shellpoint argued that relief from stay for cause under Section 362(d)(1) was appropriate. See Renewed Motion at 9:23 to 17:3.¹²It also asserted that relief from stay under Section 362(d)(2) was appropriate because the bankruptcy schedules filed by T-Shack reflected that there was no equity in the subject real properties¹³and the conversion to a Chapter 7 liquidation meant that the properties were not necessary to an effective reorganization. See Renewed Motion at 17:4-20. Shellpoint also

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maintained that in rem relief under Section 362(d)(4) was appropriate because the two successive Chapter 11 filings within three years evidenced a scheme to delay, hinder, or defraud creditors. See Renewed Motion at 17:21 to 18:22. While there is no question that T-Shack filed a written opposition to the Renewed Motion accompanied by declarations of its counsel and its principal, T-Shack does not explain in its current Stay Motion why it was likely to succeed on the merits of the Renewed Motion or the merits of its appeal of the Annulment Order. Thus, even if Shellpoint's objection to T-Shack's standing was not warranted, T-Shack does not address any of the relevant merits underlying the issuance of the Annulment Order.¹⁴ Similarly, T-Shack's assertion of irreparable injury is belied by its own business model. According to its principal, T-Shack obtained twelve parcels of residential real property in 2013 at HOA auctions for the going price at that time. See "History of the T-Shack bankruptcy"

attached to the Zajac Declaration. It asserts that it was willing to sell the residential parcels in the First Bankruptcy and split the net proceeds with the lienholder. Id. Because T-Shack acknowledges that any foreclosures by Shellpoint permitted by the Annulment Order will result in monetary losses rather than loss of any irreplaceable interests, its alleged injuries are not irreparable.¹⁵

The injury to Shellpoint arguably is also monetary rather than irreparable. But

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irreparable injury is not the inquiry. This factor asks whether a stay of the Annulment Order will result in substantial injury to the other parties. There is no dispute that the deeds of trust securing the loan held by Shellpoint were not eliminated by the HOA foreclosure sales through which T-Shack obtained title to the subject properties. T-Shack does not contest that the scheduled payments on each of the underlying loans have been in default for multiple years. There is no dispute that Shellpoint's efforts to enforce the deeds of trust were delayed by T- Shack in two voluntary Chapter 11 proceedings, neither of which resulted in a confirmed plan of reorganization. There is no dispute that T-Shack continues to pursue litigation against Shellpoint even if the asserted claims appear to be property of the bankruptcy estate. In this instance, a stay of the Annulment Order will create further and continuing uncertainty for Shellpoint in the pursuit of its remedies with respect to the subject properties. Under the facts appearing in this proceeding, the court concludes that substantial injury to Shellpoint will result from staying the Annulment Order while on appeal.

For similar reasons, a stay of the Annulment Order is not in the public interest. T-Shack availed itself of an opportunity under Nevada law to obtain residential properties at a deep discount through HOA lien sales. The effect of those HOA sales on the deeds of trust securing the loans now held by Shellpoint was fully litigated, and the residential lenders prevailed before the federal district court. T-Shack appealed that determination and the residential lenders prevailed before the Ninth Circuit. T-Shack then filed for Chapter 11 protection to prevent the lenders' enforcement of their loans secured by the deeds of trust. T-Shack failed to confirm or even propose a plan of reorganization during the First Bankruptcy. After the First Bankruptcy was commenced on April 5, 2022, T-Shack still did not propose a plan of reorganization in the Second Bankruptcy before the Conversion Motion was filed by the UST on June 17, 2025. In other words, T-Shack has fully availed itself of the judicial process to profit from a financial opportunity apparently available under Nevada law. It has lost at every significant turn. As previously mentioned, a "stay [of an order] is not a matter of right even if irreparable injury might otherwise result."

Based on the foregoing, the court concludes that T-Shack has failed to satisfy any of the

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factors applicable to the Stay Motion. Thus, even if T-Shack is correct in its assertion that it has standing to object to the Renewed Motion, it still has failed to demonstrate it is entitled to a stay of the Annulment Order pending appeal. The arguments raised by T-Shack in favor of standing, however, also are unpersuasive.

T-Shack asserts that it has standing to object to the Renewed Motion despite being removed as a Chapter 11 debtor in possession as a result of the Conversion Order. It argues it is a "person of interest" despite conversion of the case to Chapter 7 and that it maintains standing

"when an order effects discharge, exemption or estate property." T-Shack Stay Motion at 4:24-

26. In support of its person of interest argument, T-Shack cites, partially cites, or attempts to cite seven cases, entitled or apparently entitled In Re Mandel no. 17-40392 (5^thCir.); In Re Pena no. 19-60029 (9^thCir. 2020); In Re Rundlett 136 B.R. 376 (Bankr. S.D. N.Y. 1992); In Re Schwartz,

954 F.2d 569 (9^thCir. 1992); Higher Authority Law v. Segal 571 U.S. 415 (2014); In re Lee 462 B.R. 906 (6^thCir. BAP 212); and In re Koeberer (9^thCir. BAP 2021). See T-Shack Stay Motion at 5:3 to 6:13.¹⁶The cases mentioned, however, are not persuasive based on the instant record. In Mandel, the Fifth Circuit allowed a former Chapter 11 individual debtor to appeal a post-conversion bankruptcy order that allowed certain priority administrative expenses that were based on possibly nondischargeable claims. 641 Fed.App'x at 403-404. Because the order potentially impacted the debtor's discharge of individual debts, he had direct pecuniary interest in the order. In a subsequent published decision, see Matter of Dean, 18 F.4^th842 (5^thCir. 2021), the circuit characterized Mandel as being "specifically related to whether a debt would be discharged." 18 F.4^that 845. In the current case, T-Shack seeks a stay of the Annulment Order

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and has not challenged the Conversion Order. Inasmuch as T-Shack is ineligible for a Chapter 7 discharge under Section 727(a)(1), the decision in Mandel is neither applicable nor persuasive. In Pena, an individual debtor who previously filed a Chapter 11 proceeding that was converted to Chapter 7, applied to recover from the bankruptcy court's registry certain unclaimed rental proceeds derived from encumbered real property. 974 F.3d at 937. The bankruptcy court denied the Chapter 7 debtor's application and he appealed to the BAP. The bankruptcy court's ruling was affirmed by the BAP which determined that the rental proceeds were property of the bankruptcy estate that had not been abandoned by the Chapter 7 trustee. As a result, the debtor had no interest in the funds. Id. at 938. On further appeal, the Ninth Circuit determined that the Chapter 7 debtor had standing as a "person aggrieved" to appeal the BAP ruling. Id. This determination was hardly surprising because the BAP's ruling clearly determined that the former debtor had no ability to seek the rental proceeds in the court's registry as unclaimed funds under

28 U.S.C. § 2042. Id. at 940. In Rundlett, several lenders filed an involuntary Chapter 7 petition against an individual debtor who converted the proceeding to Chapter 11. After the debtor filed a proposed Chapter 11 plan and disclosure statement, the lenders moved to convert the case to Chapter 7 because, inter alia, the debtor had no source of unencumbered income on which to propose a viable plan.

136 B.R. at 379-81. While the individual debtor had standing to oppose conversion to Chapter 7, the lender's motion was granted. The court did not address at all whether the individual debtor had standing to assert any control over legal or equitable interests held by the trustee of the converted bankruptcy estate.

In Schwartz, the individual debtors filed a voluntary Chapter 11 proceeding. During the Chapter 11, the Internal Revenue Service ("IRS") imposed a penalty assessment against the debtors based on unpaid corporate withholding taxes. The IRS was unaware of the bankruptcy at the time and did not obtain relief from stay. The Chapter 11 was dismissed without a discharge. Thereafter, the individual debtors filed a Chapter 13 proceeding. Debtors successfully asserted in their Chapter 13 that the penalty assessment was void as a violation of the automatic stay. On appeal, the BAP disagreed, holding that acts in violation of the automatic stay are voidable rather

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than void. On further appeal, the Ninth Circuit agreed with the bankruptcy court that the penalty assessment was void ab initio. 954 F.2d at 571. Nothing about the Schwartz proceeding involved former debtors asserting control over property of the bankruptcy estate or asserting legal interests reserved to a bankruptcy trustee. Moreover, nothing in the proceeding addressed the standing of a former debtor in possession to object to relief sought by creditors of the bankruptcy estate.

In Siegel, the voluntary Chapter 7 debtor claimed a residential homestead exemption. The assigned Chapter 7 trustee sought to surcharge the exemption on the basis of the debtor's misconduct. Over the debtor's objection, the bankruptcy court granted the surcharge. That decision was affirmed by the BAP and the Ninth Circuit. On the debtor's further appeal, the Supreme Court reversed, concluding that the bankruptcy court did not have statutory or inherent authority to surcharge or deny an exemption on a ground not specified under bankruptcy law.

571 U.S. at 423-428. Nothing about the decision in Siegel discusses whether a former Chapter 11 debtor in possession has standing to assert legal or equitable interests of the bankruptcy estate after conversion to Chapter 7.

In Koeberer, the Chapter 7 debtors sought to sanction a certain creditor for violating the automatic stay by pursuing certain post-bankruptcy litigation. 632 B.R. at 686. As Section 362(k) expressly permits sanctions to be sought by "an individual injured by any willful violation of a stay provided by this section," the individual debtors clearly had independent standing to pursue the statutory remedy. The BAP affirmed the bankruptcy court's finding of an automatic stay violation and its denial of damages, but reversed and remanded on its denial of cost and attorney's fees. Id. at 686-692. Nothing about the decision in Koeberer suggests that a former Chapter 11 debtor in possession has standing to assert legal or equitable interests of the bankruptcy estate after conversion to Chapter 7.

In essence, the purported cases cited by T-Shack (perhaps except for the last, In re Lee decision), do not support a conclusion that it is likely to succeed on the merits of its assertion of standing.

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Because T-Shack also has not demonstrated a likelihood of success as to the substantive merits of the Renewed Motion, nor that it will suffer irreparable injury, a stay of the Annulment Order is unwarranted.

IT IS THEREFORE ORDERED that the Motion for Stay Pending Appeal of the Order Annulling the Automatic Stay filed by T-Shack, Inc., Docket No. 158, be, and the same hereby is, DENIED.

Copies sent via CM/ECF ELECTRONIC FILING Copies sent via BNC to:

T-SHACK, INC.

ATTN: OFFICER OR MANAGING AGENT

405 COUNTY RD 25

MANTADOR, ND 58058-4026 T-SHACK, INC.

ATTN: OFFICER OR MANAGING AGENT

5155 W. TROPICANA AVE., UNIT 2050

LAS VEGAS, NV 89103

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