The Doctrine of Equitable Mootness

The Doctrine of Equitable Mootness

James M. Lawniczak considers the circumstances under which the doctrine of equitable mootness prevents appellate review of a consummated plan of reorganization. In particular, he focuses on three recent appellate cases, from the Fifth, Sixth and Tenth Circuits, and analyzes the different approaches they follow. There is much disagreement as to the standard of review on subsequent appeal and the actual factors to be applied in the final decision.

Mr. Lawniczak writes: "Equitable mootness" is a doctrine developed by appellate courts that provides under certain circumstances for the dismissal of appeals from bankruptcy court orders confirming plans. It is applied where a plan of reorganization has been "substantially consummated" such that the appellate court determines that it would be inequitable or impractical to grant relief to the appellant.

There have been a number of recent circuit court of appeals cases that have discussed and applied the doctrine of equitable mootness in a bankruptcy context. There is a split among the courts of appeals as to whether the standard of review of a lower court's decision on equitable mootness should be de novo or a more deferential standard, such as clearly erroneous or abuse of discretion. There are also differences among the courts of appeals as to the factors that are to be considered in making a determination whether to apply the doctrine. Those differences will be discussed below, following an introduction to the doctrine and a discussion of the facts of several of the recent courts of appeals cases.

Chapter 11 plans of reorganizations can be quite complex and generally contain myriad concepts that combine to conclude a chapter 11 case. Oftentimes, parties who disagree with their treatment in such a plan object and, if they lose, appeal from the adverse decision. In those cases where the aggrieved party has a minor role in the scheme of the entire plan, the party may not be able, or even want, to post a large bond to stay consummation of a global plan, pending the appeal of its more narrow issue.

Access the full version of "The Doctrine of Equitable Mootness" with your ID

If you do not have a ID, you can purchase the Emerging Issues Analysis content through our lexisONE Research Packages