MEMORANDUM & ORDER Michael R. Feinsod (“Feinsod”) and Richard L. Feinstein (“Feinstein”) (together, “Movants”), former directors and officers of Elk Associates Funding Corporation (“Elk”), move this Court for an order lifting the receivership stay entered on April 24, 2013 for the limited purpose of allowing Movants to file an action against the Small Business Administration (“SBA”) in its agency capacity. (Mot., D.E. 104; Movants’ Br., D.E. 104-1; Rec’r Opp., D.E. 106-2; Reply, D.E. 109.) For the reasons that follow, the motion is DENIED. BACKGROUND AND PROCEDURAL HISTORY1 I. Elk and the SBA The SBA issued Elk a Small Business Investment Company (“SBIC”) license in 1980. As a SBIC, Elk made loans to small businesses through private capital and money raised by selling debt instruments (“Debentures”) to the SBA. In 1999, Ameritrans Capital Corporation (“Ameritrans”) was formed to acquire and manage Elk as a wholly-owned subsidiary. (Movants’ Br. at 3.) In January 2009, Elk applied for SBA financing. The SBA did not provide financing for almost a year and Elk encountered difficulty raising capital. As a result, Elk became underfunded and on July 8, 2010, the SBA informed Elk that it was “capital impaired.” Under the relevant regulations, SBICs that remain capitally impaired are eligible for liquidation by the SBA. To cure its capital impaired status, Ameritrans and Elk sought to sell equity in Ameritrans to private investors. However, the transactions required SBA approval. In 2011 and 2012, Elk and Ameritrans reached deals with two investors that, if successful, would have allegedly raised sufficient funds to recapitalize the companies. The SBA denied both transactions. In February 2012, Elk remained in capital impaired status and the SBA indicated that it intended to begin liquidation to recover the amount Elk owed to the SBA under outstanding Debentures. II. The Elk Action Settlement On March 20, 2012, Elk initiated an action against the SBA, among others, under the Administrative Procedure Act alleging that the SBA acted arbitrarily and capriciously when it denied the transactions that would have allowed Elk to raise “the capital required to prevent Elk from being liquidated.” See Elk Assocs. Funding v. U.S. Small Bus. Admin., No. 12-CV-0438 (D.D.C.) (the “Elk Action”); (See Movants’ Br. at 4.) On October 31, 2012, Elk and the SBA executed a “Settlement Agreement and Mutual Release” that resolved the Elk Action (the “Settlement”). (Settlement, Ex. A to Mot., D.E. 104-2.) As relevant here, the Settlement required, among other things, that Elk: (1) pay $7,900,000 to satisfy its outstanding debt to the SBA (Settlement at 2 1) and (2) execute a Consent Order of Receivership to be filed by the SBA “only in the event that ELK fails to make the Payment” as required by the Settlement (Settlement at 3 4).2 The Settlement also contained mutual releases. As pertinent here, the SBA, and its “officers, officials and its present and former employees and agents, in their official capacities only” released Elk, including Elk’s officers and directors, from “any and all actions.” (Settlement at 3-4 6.) III. This Action3 On January 4, 2013, Elk made an initial payment of $1.2 million to the SBA but failed to pay the remaining amount due under the Settlement. (Movants’ Br. at 5.) Consistent with the terms of the Settlement, on February 14, 2013, the SBA commenced this Action (Compl., D.E. 1) and on April 5, 2013, filed the proposed Consent Order of Receivership (Proposed Order, D.E. 7-1). On April 24, 2013, the Court entered the Consent Order of Receivership (the “Receivership Order”) that appointed the SBA as the permanent, liquidating receiver of Elk (the “Receiver”) and entered judgment in favor of the SBA in the amount of Elk’s outstanding debts, over $20 million. (Receivership Order, D.E. 15.) The Receiver was appointed “for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by this Court.” (Receivership Order 1.) The Receivership Order enjoined and stayed all civil litigation involving Elk, Elk’s assets, the Receiver, or Elk’s present or past officers and directors, among others, absent permission from the Court. (Id.
