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Reasoning:
(i)Although the first two prongs of the equitable mootness analysis existed here, the Fifth Circuit noted that substantial consummation of the plan is not necessarily fatal to an appeal. "Only when the relief that a party requests will likely unravel the plan does it become impracticable and inappropriate for a court to grant such relief; in such a case, the court abstains from reviewing the appeal." Here, the record is such that the assumption or rejection of the Alberta Contract would have little or no adverse effect on Blast's reorganization or on any third party. Blast is not using the technology that it had originally licensed under the Alberta Contract and does not plan to use it. Nor would rejection of the Alberta Contract have an effect on Blast's ability to keep performing under the plan and making monetary distributions under the plan. The $2 million in distributions that Blast made on February 26, 2008 do not insulate the plan from this appeal. Blast admitted that the Alberta Contract is not essential to its reorganization; and although the parties statements are not binding on the court, in the absence of any evidence to the contrary, it was an abuse of the district court's discretion to disregard such comments. Although the district court referred to an allegation that Blast owed Alberta "significant monetary payments" as an additional reason for finding equitable mootness, there was no evidence illuminating the effects of those payments on the success of the plan. As to this point, the Fifth Circuit said that it could not say whether these payments due (assuming they are due) to Alberta would upset the plan or affect third parties. The court remanded the matter on this issue.
(ii) The Fifth Circuit noted that § 1127(a) governs modifications of plans before confirmation and § 1127(b) does not expressly prohibit appellate review of plan confirmation orders, which is instead limited by the doctrine of equitable mootness. Here, the court found that § 1127(b) did not apply. "[N]either the debtor nor a proponent of the confirmed Plan is attempting to modify it; instead, Alberta, which is a creditor and a plan challenger, is attempting to appeal bankruptcy court orders. The Consolidated Appeals arose before the Plan has been confirmed, and as pre-confirmation filings they do not fall into the ambit of § 1127(b). The Confirmation Appeal, on the other hand, is governed by the equitable mootness doctrine, not by § 1127(b). Neither the language of § 1127(b) itself nor our jurisprudence applying the statute indicated that it should be applied either to confirmation appeals or to appeals of pre-confirmation bankruptcy rulings. An application of § 1127(b) that limits appellate review of bankruptcy court orders would mean that no bankruptcy court action could be reviewable after substantial consummation of a plan." Indeed, the doctrine of equitable mootness would become pointless. Thus, the district court erred in applying § 1127(b) to these appeals.
Facts: The facts surrounding this case deal with a cemetery, Graceland Memorial Park South ("Graceland"), located in Miami and Graceland's bankruptcy in Delaware. Osiris Holding of Florida, Inc. ("Osiris") bought Graceland in 1991; in 1995, Alderwoods Group, Inc. ("Alderwoods") bought Osiris through a stock purchase. At the time, Alderwoods was known as Loewen Group International, Inc. ("Loewen"). The Loewen group filed for bankruptcy in Delaware in 1999. In 2006, after the bankruptcy, Northstar Graceland, LLC ("Northstar") bought Graceland from Osiris. In October 1999, the Delaware bankruptcy court entered a bar date order and approved the notice procedures authorizing the debtors to serve notice on unknown creditors via publication in four nationally known newspapers. The bankruptcy court specifically found that the publication notice complied with the notice requirements of the Federal Rules of Bankruptcy Procedure. The approved publication notice (the "Notice") only contained the name Loewen Group. Later, the bankruptcy court approved the debtors' plan. On the effective date of the plan, Loewen changed its name to Alderwoods. In December 2004, a number of plaintiffs sued Northstar and the former debtors in state court (the "State Court Complaints") related to the fact that the cemetery lost the plaintiffs' loved ones' bodies. However, although the state court complaint was not filed until 2004, the facts surrounding the loss of the bodies began to emerge beginning in 1986. The former debtors moved to dismiss the State Court Complaints based on the fact that they had been discharged through the bankruptcy case.
©2010 Leif M. Clark
