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.
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.
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.
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